Battle of the prices
View(s):The ‘choon paan karaya’ was going down the lane in his three-wheeler with a catchy tune blaring on the loudspeaker, when he was stopped by Kussi Amma Sera. Mabel Rasthiyadu and Serapina were also at the gate. 
Checking the price of ‘maalu paan’ and ‘bunis’, Kussi Amma Sera exclaimed, “Malli, mevala gannang adukarala-de (Have these prices been reduced)?”
“Neha Miss, eeye gaanama thamai (No, these are yesterday’s prices),” he replied.
After buying whatever they required, the trio retired to sit under the margosa tree and engaged in a conversation about the cost of living. “Rajaya mila adu karata, velendo egollange mila adu karanne neha (Even if the government reduces prices, the traders don’t reduce their prices),” said Serapina.
“Eka hari. Apey velando sadarana neha (That’s right. Our traders are not reasonable),” added Mabel Rasthiyadu. “Badu adu karata, mila pahath vela neha (Even though taxes were reduced recently the prices have not been brought down),” interjected Kussi Amma Sera.
The morning rays of the sun were then rudely interrupted by a sudden shower of rain, forcing the trio to run into the house and continue their conversation in the kitchen, while preparing tea.
As I waited for my cup of tea, I reflected on the cost of living, after being recently drawn to a news story about the poverty line, according to statistics released by the Department of Census and Statistics (DCS).
At the same time, the phone rang. It was my new-found friend ‘Hinga’ Pala, a name I had attached to our own Siripala, a beggarly character who always asks for money, even though he has enough and more financial resources. However he is a house of knowledge on many matters that affect you and me. I borrowed the name courtesy of a character in the popular ‘Yes Boss’ comedy series on MTV, which I relish, particularly the role played by the late Wijaya Nandasiri.
“I say… I went to the market to buy vegetables but the prices are the same. I thought the recent tax reductions would bring down prices,” he said. “Kussi Amma Sera and her friends were discussing the same issue, a while ago,” I said.
“We need a stronger arm of the government, particularly the Consumer Affairs Authority – if they are responsible in protecting the consumer – to ensure that traders bring down prices when necessary,” he said.
“Agreed. One of the problems in the country is that there is no strong civil society movement to defend consumer rights and ensure consumers are not fleeced by the trade,” I said, after which we engaged in a long conversation on this topic, ending it as usual with ‘Hinga’ Pala asking for a loan and I, as usual, politely responding that I didn’t have any money.
Back to the DCS data, according to statistics available on its website, the latest national level poverty line in October 2019 was Rs. 4,897 rising from Rs. 4,890 in September and Rs. 4,707 in November 2018.
The DCS said the reason for the increasing official poverty line is the high CCPI (Colombo Consumer Price Index) value reported in October 2019, compared to the previous month.
According to the DCS interpretation, those persons whose per capita monthly consumption or expenditure is below the national poverty line are considered poor. It is the minimum expenditure per person per month to fulfil their basic needs.
Residents of 15 of the 26 districts live below the national poverty line of Rs. 4,890. These include Matara (Rs. 4,680) and Moneragala (Rs. 4,611), at the lowest segment of poor districts.
While the per capita of residents in Colombo was above the national poverty line at Rs. 5,316; in Gampaha at Rs.5,155; Kalutara at Rs. 5,129; Kandy at Rs. 5,074; Nuwara Eliya at Rs.5,209 (possible because plantation workers get a steady income); Batticaloa at Rs. 4,989; and Matale at Rs. 4,983; residents in the districts of Galle, Hambantota, Jaffna, Mannar, Vavuniya, Mullaitivu, Kilinochchi, Trincomalee, Kurunegala, Puttalam, Anuradhapura, Badulla and Ratnapura, and including the two mentioned in the earlier paragraph, fell below the national poverty line.
According to the CCPI, headline inflation, rose year-on-year to 5.20 per cent in October 2019 from 3.70 per cent in January 2019, while core inflation was unchanged at 5.50 per cent in both months. In the case of the National Consumer Price Index (NCPI), headline inflation rose sharply year-on-year to 5.60 per cent in October from 1.20 per cent in January, while core inflation rose to 5.60 per cent from 5.10 per cent in January.
While the government announced a slew of tax changes including bringing down NBT and VAT, the trade has been slow to ring in the changes though it may be because some changes are effective from December 1 and others in January.
As stated earlier, while the government is expected to protect consumers from traders fleecing them and ensure prices are reflected by the current tax trends, this is not the case. Recently, when there was a hue and cry about an increase in wheat-flour and wheat-based food like bread and pastries, some traders increased prices even though there was an industry decision not to implement an increase.
In recent times, large retail groups like Cargills, also one of the country’s largest food producers, have engaged in placing prices on an equal footing by eliminating the middle man, the source which is hugely responsible for an uneven balance in the pricing mechanism. In the middle-man scenario, the farmer gets a low price, while the consumer pays a high price, with huge profits accrued by the middle-trader.
In the case of large chains like Cargills, farmers are paid a reasonable price for their produce and consumers also get products at a reasonable price while the company retains a decent-enough profit margin. Thus, all sides in the equation are happy and content.
Just as I was winding up my column, Serapina walked into the room with my second cup of tea. It seems the trio was having a long chat in the kitchen.
“Mahattaya, mokak-da li-yanne (Sir, what are you writing)?” she asked. “Ogollo sakachcha karapu de gena thama liyanne (What you all were discussing),” I replied, reflecting on the hopes of many that prices will come down in keeping with tax trends in December and January. PS: The Inland Revenue Chief was quoted in newspapers on Friday as saying that according to the normal process, the tax benefits would be felt in two to three months’ time.