Escalating prices - regulation needed

Retail prices of several essential food items have increased sharply during the last months despite government intervention. Market analysts said that there are several reasons for this. Firstly this is a seasonal trend and high consumer demand in this festive season contributes to price increases up to some extent. Continuous heavy rain and supply disturbances also have created a shortage of some food items, especially fruits and vegetables, where cultivations have been damaged.

Coconut prices too have shot up and a coconut is sold at around Rs.35-40. In some areas the price is over Rs.50 per nut. The increase is also a result of supply constraints.

Market sources said that in the coming weeks the prices of these commodities will increase further with rising demand.

Rice price increases continue and last week the wholesale price of a kilo of Nadu was Rs.54-55, Samba Rs.64-69, Red Kekulu Rs.48-52, White Kekulu Rs.50-55 and Samba Kekulu Rs.60-63.

Traders said that this price level is fair and affordable to the masses but they expect a price increase in the coming weeks as usually happens during this festive season.

They said that due to bad weather there may be supply disturbances and millers may use the situation to increase prices. Therefore price regulation for rice is needed at this time, they said.

The wholesale price of big onion was Rs.100-115 a kilo and Red onion (local) Rs.140, potatoes (Indian) Rs.70 and potatoes (Pakistani) Rs.43. Local potatoes were not available. Meanwhile the government warned traders not to create an artificial price increase as there were enough paddy stocks in the country.

The government has decided to import essential food items if the traders make artificial shortages to increase prices, the Minister of Consumer Affairs Johnstan Fernando said last week.

The Trade Ministry said that many essential food items can be imported from Pakistan quickly and the government is ready to import if the traders make artificial price increases.

The Ministry has already decided to import 2500 tons of chicken and 50 million eggs for the festive season. Despite maximum retail price of Rs. 350 imposed by the Consumer Affairs Authority price of chicken has increased to Rs.380 per kilo. Imported products had not reached the market by the end of last week. Producers said that price of chicken can be reduced quickly if the government reduces the levies charged on chicken amounting to Rs.57.

Although the State owned Sathosa outlets offer these items at a relatively lower price the narrow price difference and small market share is not sufficient to influence the open market price.

Market analysts said that government intervention in controlling the prices of essential consumer goods has not been successful.

The special economic centres and budget shops introduced in the past have failed and they cannot influence the market, they said. -GW