Consumers cautious in spending

Sri Lankan consumers are treading cautiously in purchasing essential items and goods and are keen to cut spending. Middle income shoppers have suddenly become price conscious and are negotiating value for money against the earlier pattern of purchasing food items ad essential goods without ‘blinking an eyelid’.

This is what a Business Times (BT) team found out from a series of street interviews in the Colombo metropolis to ascertain how the rupee is thriftily spent in budgeting static income with the vastly fluctuating prices of essential items.

The manager of a leading supermarket in Colombo said that essential items are moving fast and people are not going for luxury items. Most of the consumers are aware about the current economic situation in the country and cutting rash spending. The consumers have shifted to ‘more value for money’ outlets avoiding super markets. People are shifting their buying patterns which earlier was care free spending, he said.

However, demand for widely used products like soap, soft drinks and margarine is falling because inflation is eating into the disposable incomes of low income consumers. Sales volumes of branded products like milk powder, butter, jam and soft-drinks have declined this year. For retailers, profit margins on food however are less compared to products used around the house for cleaning and disinfecting.

“Apart from the Rs 30,000, they spend another Rs 8 to10,000 for vegetable and fish while expenses for children’s education is in the range of Rs 10,000”- Fidel Fernando

“Inflation has an impact. We can see that consumers are cutting spending on basic items. As a result they may be spending a little bit more on food and drink today and leaving less money for other items,” said Anil Seneviratne, a retail trader at Kollupitiya.

“Those days I used to buy food and other essential items which were essential for my day-to-day needs. But now I have to think twice, I always compare prices,” says Malini Leuke, a housewife, whom we met at a grocery shop at a supermarket. “I’ve cut down on unessential goods to keep up with my budget,” she said.

She noted that it was difficult to balance her budget as she was totally dependent on her husband’s monthly income. She used to switch off the fridge and other unnecessary lighting at night to reduce her electricity bill. “We are also using water sparingly as we cannot afford to pay heavy water bills,” she said.

Irangani Karunaratna, a shopper and a housewife, says she’s saved rupees off her shopping bill by reducing purchase quantities and by being more selective.

U.I.M. Ishaq, 53 years old from Borella who has three grown up children earns about Rs 10,000 per month which is supplemented by the income his employed children bring in to manage the 6-member family.

For food they spend around Rs 700 to Rs 1,000 per day which they adjust according to the income and sometimes spending on food is limited to Rs 700. His children also do studies and they spend for it of their own and these expenses do not come into their budget.

“Earlier people use to buy 500 grams but now they buy only 250 grams of those items”- K.L.A Kapila

He said that for fish and vegetable they sometimes spend outside their budgeted Rs 700 and around Rs 300 is spent on that, respectively. He said that soaring prices have hit their budget and what is happening now is that according to the price increases they have reduced the purchased items into half like 500 grams to 250 grams.

Putting his hand into the large plastic bag he was carrying, he pulled out a coconut and said, “I bought this for Rs 32 but about a month ago a coconut was around Rs 22. Earlier we bought around 2 to 3 nuts, but now reduced to one.”

K.L.A Kapila, a vegetable vendor in the Pettah vegetable market told the BT team that earlier people used to buy 500 grams but now they buy only 250 grams of those items. He said that they also list prices for 250 grams now. Mr Kapila said that as much as 60 % of their sales have dropped compared to last year.

Fidel Fernando from Wennappuwa, who was shopping in Colombo, said he hands over Rs 30,000 (from his income of around Rs 50,000) to his wife and she does the shopping, spending most of that money on food. He said that his wife does careful budgeting.

Apart from the Rs 30,000, they spend another Rs 8 to10,000 for vegetable and fish while expenses for children’s education is in the range of Rs 10,000. He said he uses a credit card, but what he does is buy everything through the card and paying the whole debt at the end of the month, avoiding the paying of any extra taxes.

Most consumers told the BT team that budgeting has been extremely difficult due to the massive swing (on the high side) in essential food prices. One consumer said rice is not available in some supermarkets and the earlier price of a kilo of big onions – Rs 120 have gone up to Rs 150. The same person said that 100 grams of green chilies has shot up to Rs 40.