CoL: Higher and higher

By Malik Gunatilleke

The plight of the consumer keeps getting worse with prices of gas, electricity, fuel and other items increasing day-by-day while a chain reaction has been set off by the depreciation of the Rupee.

Transport costs, food prices sharply shot up during the week with a plain-tea going up by Rs. 2.50, a string-hopper by 50 cts and an average lunch packet up by Rs. 20.

But consumers are in for more heartburn as domestic gas cylinder suppliers are haggling with the government for a further increase and the CEB also warning of a hike, citing additional costs incurred following fuel price increase as reasons.

The depreciation of the rupee as against major foreign currencies is further aggravating the situation with prices of all imported items including vehicle spares, food items, electronic items increasing in price.

The price increase is being felt mostly by the middle-class income groups with their earnings being limited.

A loaf of bread has increased by three rupees while the price hike in milk foods is imminent. One brand will be increasing the price of a packet of 450 grams by Rs. 30 with immediate effect. One of the main concerns has been the rising fuel price which has been increased thrice within five weeks, with a warning from the Ceylon Petroleum Corporation (CPC) Chairman, Asantha de Mel that there may be further hikes depending on world market prices.

Vegetables, office van and trishaw charges have all increased within the last week. Officer transport service fares have gone up by Rs. 200 to 300 per passenger. Charges from Wattala to Colombo have been increased from Rs. 1,300 to 1,500.

Lorry owners transporting vegetables from areas such as Nuwara Eliya and Dambulla to Colombo and those transporting goods from Colombo to outstations have also upped their fees.Meanwhile Shell Gas is pushing hard for a further increase.

The government approved an increase of Rs. 38 on a Shell Gas cylinder making it Rs.998 with immediate effect on May 14, after blaming the media for creating an artificial shortage by reporting about the impending increase. The prices of a Laugfs Gas cylinder was also increased by Rs. 28 making it Rs.967.

However Shell Gas Lanka Ltd. (SGLL) is battling hard to increase the price of a cylinder by Rs.161. Shell Finance Director Rimoe Saldin said they were holding talks with the Consumer Affairs Authority (CAA) on a further increase to reduce the losses incurred by the company.

He said the company had lost over Rs.767 million over the past three years due to price control and they were concerned as to how they would continue to operate with such heavy losses.

“We import and distribute Liquefied Petroleum Gas and the import costs depend on world market prices and the exchange rate. If prices of petroleum products like Petrol and Diesel move with world market prices, why not LPG? These all come from the same source,” he argued.

The CEB too has applied for an increase in electricity tariffs to compensate for the price hike in diesel. The CEB is granted a litre of diesel at a concessionary rate of Rs. 55 by the Ceylon Petroleum Corporation (CPC) but with the increase in fuel prices the CPC had raised the price to Rs. 64 a litre.

CEB officials say this increase has caused them a loss of about Rs.20 million prompting them to ask the government for a re-evaluation of electricity tariffs.

Another sector that has been hit by the recent fuel hikes is the fishing industry.

Herman Kumara, president, National Fisheries Solidarity Movement (NFSM), complained that it was the middle-man who profited the most as they raised the price of fish.

Meanwhile, the bakers are complaining that the increase in bread prices would only mean that consumers would switch to a cheaper alternative such as rice as bread would soon be classed as a luxury item.

Parakrama Dassanayake, president Bakery Owner’s Association said consumers are yet to feel the full effect of the increase in wheat prices.

“Bakeries have not yet increased the prices of other wheat based food items, but once they do consumers may switch to alternative food types,” he said. The picture gets even gloomier for the consumer as a bus fare hike will come in to effect from July.

Gemunu Wijeyratne, president, Private Bus Owners’ Association (PBOA) said he estimated an increase of about 15%, as the cost of living had increased dramatically since last July.

“Many people are under the impression that the PBOA is pushing for an unjust bus fare hike, but this is our annual hike and it is calculated by the government,” he said.

Trade, Commerce and Consumer Affairs Minister Bandula Gunawardena said the government is unable to control the price increases in fuel, which he says has been the root cause for the sudden inflation.

“However, the government is working on controlling prices of essential items so that the burden placed on the consumer maybe minimised,” he said.Minister Gunawardena said that prices of essential items such as sugar and some vegetables had reduced considerably and these have reduced the cost of living price index by 5% since January 2007.