Consumers yet to benefit from drop in oil prices
by Rohana Jayalal
“World crude oil prices have dropped sharply during the past few
weeks. However, the benefit is yet to be passed on to the consumer.
Therefore, as a responsible Association we call upon the government to
reduce the price of diesel to cut down on transport costs,” All Island
Consumer Rights Protection Association (AICRPA) Secretary, Mahen Deva
told Sunday Observer Business.
He said tax and prices increases have a negative impact on many
aspects of consumers’ lives. People won’t get the same nourishment as
green vegetables by eating dried fish and canned fish.
Deva said the Association hopes the government would intervene to
reduce the cost-of-living burden on consumers.
Director General of the Department of Fiscal Policy, A.K. Seneviratna
said the tax hike will directly impact the telecommunication sector and
the new tax may affect some other sectors too. The Nation Building Tax (NBT)
was increased from 2 to 4 percent in Budget 2016. He said that the
decision to increase telecommunication rates lies with the service
providers. The nation building tax would not be imposed on essential
food items, electricity and water, Seneviratna said.
The ports and airport development levy will be increased from 5 to
7.5 percent. The changes would need an additional Rs. 15,000 to be paid
to banks per motor vehicle at the time letters of credit for import are
opened. For three-wheelers and motorcycles it would be Rs. 2,000.
However, 11 essential items are now under the Special Commodity Levy.
Changes to other taxes such as VAT and PAL do not have an impact as they
are exempted from the new Nation Building Levy (NBL). “Essential goods
are not affected by changes in other taxes, as the NBL does not apply to
them. Hence the prices of ‘essential items’ would not change,” he said.
Chairman, All Ceylon Bakery Owners’ Association, N.K. Jayawardena
said, “We had talks with Finance Minister Ravi Karunanayake on this
issue and he promised some relief. Till this is provided, bakers cannot
give any relief to customers. Food outlets have increased the price of
packets of lunch, pastries and other bakery products passing on the
additional taxes to unsuspecting consumers.”
Jayawardena explained that the increase in the Nation Building Tax to
4% had affected the prices of ingredients used in bakery products.
The price of a packet of rice was increased by about Rs. 30 from last
week, in most takeaway outlets while most pastries and confectionery
products were increased by Rs. 5, Jayawardena said.
He said they passed on the NBT increase to customers as there were no
controlled prices for cooked and most bakery items and, therefore, they
could fix their own prices.
He said an executive committee meeting of the Association will be
held to reach a final decision.
Research Officer and Head of the Marketing Food Policy and Agri-Business
Division (MFPA), Hector Kobbekaduwa Agrarian Research and Training
Institute, W.H.D. Priyadarshana, said this was the intervening period
between the Yala and Maha seasons. Crops from the Yala season are
harvested from September to October while crops for the Maha season are
planted from November. As such, what we tend to get during this time are
mostly short-term crops.
Every year there is a general increase in vegetable prices from
November to January due to the rains that prevail during these months.
There is no significant increase in demand, but the supply is low,
hence the high prices.
He said prices would drop down after the end of January, as the
weather tends to improve around this time.
Some vegetables sent to the wholesale market are inferior in quality
due to the weather. The quantity that actually reaches the consumer is
even less, Priyadarshana said.He pointed out that the prices of several
subsidiary food crops have been reduced by the Budget to offset the
impact of the price increases of other items while also imposing the
maximum retail price for several consumer goods. At present, there is a
maximum retail price in place for items such as dhal, sprats and dried
fish, while the prices of potatoes and onions have also been reduced.
A spokesman for the Dambulla Economic Centre said that the wholesale
prices of many vegetables in the market had increased to over Rs. 300 a
kilogram.
The wholesale price of a kilogram of beans, carrots, leeks, banana
and pepper had increased to over Rs.300 per kilogram at the Centre.
The prices of low country vegetables such as bittergourd, brinjals
(eggplant) and snakegourd have also increased to between Rs.130–200 per
kilogram.It has been observed that when wholesale market prices reach
such a level, the prices in the retail market also increase by Rs. 100
more. Farmers point out that the reason for the sharp increase in
vegetable prices was the destruction of crops by the incessant downpour
experienced in recent days.
A vegetable trader in Pettah, N.A. Mahinda said the current prices
are the highest experienced in over 17 years. From the day prices
increased, most customers bought less quantities.“Nobody purchases more
than 500 grams per item, unlike earlier. This is because most vegetables
are over Rs 100 per kilogram, and people cannot afford it,” he said. |