News
Astronomical prices crimp Christmas spending
View(s):By Yoshitha Perera
The rising cost of living has taken a heavy toll on consumer confidence this Christmas season and retailers are feeling the effects.
Sri Lankans have been cutting back on discretionary spending, gifts, celebratory food and beverages and decorations. The situation is reflected in the Pettah Market, Colombo, where vendors say sales have been low.
The retail sector as a whole is facing economic headwinds.
The small and medium-sized Enterprises (SMEs) and the retail sector have not improved since the downturn, and costs have continued to rise, according to the Sri Lanka Retailers’ Association (SLRA).
Mohammed Nazeem
“If the retail sector fails completely, it will have a significant impact on the larger ecosystem that relies on retail, spreading across the country. The financial and social consequences will be unprecedented, and job loss alone will be disastrous,” the association said.
According to SLRA data, the retail sector accounts for more than 30% of gross domestic product. Sales people, cashiers, and lower mid-segment jobs account for a large portion of employment in the sector.
According to the SLRA, sales volumes remained flat, or fell, in some sectors, causing cash flow issues.
“Due to import restrictions, retailers are still unable to bring in enough products for the (festive) season. Consumers, on the other hand, are experiencing a drop in disposable incomes as a result of inflation,” SLRA president Murali Prakash said.
Pettah Market retailer Mohammed Nazeem, 35, claimed that he and his family had never faced such adversity before.
Just two days ahead of Christmas, the Sunday Times observed that decorations were aplenty at the Pettah Market, but no buyers.
“The long-standing import restrictions and financial issues had affected imports. We received Christmas decorations imported last year by wholesalers. But, they sold them at higher prices,” Mr. Nazeem said.
“In the past years, we sold a single decoration for about Rs. 100, Rs. 200. But, now it is not possible to sell like that,” he said.
Anushka Muscalle, a home-based businesswoman who sells handmade Christmas decorations each year, said she set up shop outside for the first time.
Pettah: Low sales for Christmas decor
According to the Department of Census and Statistics, nationwide inflation in November 2022, as measured by the National Consumer Price Index (NCPI), fell to 65% from 70.6% in October 2022.
The November 2022 NCPI for all items, fell marginally to 256.3 from 256.9 the previous month. In comparison to November 2021, the reported inflation for November 2022 was primarily high due to higher price levels in the food and non-food categories.
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