Up, up and away – fuel prices
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Aldoris, the choon-paan karaya, came down the lane but without his loudly-sounding-but-delightful melody. Stopping at the gate where the trio had gathered, he said with a morose look, “Aiyo, apahu indana mila wedi wela ne (Aiyo, fuel prices have gone up once again)”.So, that was the reason for his bleak and moody arrival this Thursday morning.
“Eka balapai-da oyage pestri saha anikuth bekeri ahara wala milata (Will it affect prices of your pastries and other products),” asked Serapina.
“Ow, apita apahu sarayak mila wedi karanna wenawa (Yes, once again we have to increase prices),” he said.
“Ahara wala mila maaru karana eka amaru athiney indana mila uda-pahala yanakota, mae langadi wenawa wage (It must be difficult to adjust food prices when fuel prices go up and down as has been happening in recent months),” noted Kussi Amma Sera.
“Hema dekama mila wedi wenawa indana mila wedi wena kota. Gas milath wedi wela. Bus mila langadima wedi wei iskola van mila wagey (Everything goes up when fuel prices rise. Gas prices have also increased. Bus fares will also go up and also student van hires),” said Mabel Rasthiyadu, biting a maalu paan from Aldoris’s morning sale.
The government was so confident that the entry of three more players to the import and distribution of fuel, currently controlled by the Ceylon Petroleum Corporation (CPC) and Lanka IOC (LIOC), would favour competitive prices, so why haven’t prices become more competitive at the pump?
This was the same question posed by Karthelis, the fish vendor, when he came down the lane on this gloomy Wednesday evening.
“Sir, the government has said prices can be competitive when new companies come into this market. But why are all three companies selling at the same price,” he asked. The newest and third player is China’s Sinopec which provides a temporary discount of Rs. 3 per litre as a market promotion campaign at its new shed at Mattegoda, near Colombo. Two more foreign players are set to enter the fuel market in coming months.
“Well…..the government wants to pass the burden of high global prices to the consumer. But the same doesn’t happen speedily when world market prices fall,” I said.
“Today, I filled the motorcycle tank with petrol at the new rates. How can I sell fish at the old price? The other problem is, how can I sell fish at a higher price when consumers are suffering these days with high prices,” he asked. If a household spent Rs. 40,000 a month on provisions three years ago, that budget has increased by three-fold today.
The CPC increased fuel prices on August 31. The revised prices were 92 Octane Petrol – Rs. 361 per litre (increased by Rs.13); 95 Octane Petrol – Rs. 417 (increased by Rs. 42); Auto Diesel – Rs. 341 (increased by Rs. 35; Super Diesel – Rs. 359 (increased by Rs. 1) and Kerosene – Rs. 231 (increased by Rs. 5).
So, are fuel prices fuelling more inflation? The Central Bank says inflation has fallen to a single digit level in recent weeks compared to soaring double digit inflation at this time last year when the country faced an acute economic crisis.
Accordingly, headline inflation, as measured by the year-on-year (Y-o-Y) change in the Colombo Consumer Price Index (CCPI, 2021=100)1 decreased to 4 per cent in August 2023 from 6.3 per cent in July 2023.
Inflation, according to the Central Bank, has been coming down in recent months in accordance with the projections of the banking regulator. It was revealed that as a result of the policy measures taken thus far, and well anchored inflation expectations, inflation is expected to stabilise around mid-single digit levels over the medium term.
However, these numbers only reflect the rate (percentage) of increase of prices, not the actual prices themselves and prices at the market tell a different story. There, prices of consumer goods remain the same and eat into the pockets of middle-class wage earners.
According to the Central Bank’s weekly data of market prices, some prices have come down but most remained at last year’s levels or have gone up. For example, beans a year ago cost Rs. 330 per kg, while today it’s Rs. 375; Carrot was Rs. 350 and today Rs. 465; Brinjal Rs. 387 and Rs. 297; Green chillies Rs. 420 but now Rs. 460; Red onions Rs. 415 and Rs.340; Coconut Rs. 90 then and Rs. 120 today.
The World Bank, in its twice-a-year update on Sri Lanka, said in May that Sri Lanka’s ongoing economic crisis is estimated to have doubled the poverty rate from 13.1 per cent to 25 per cent and it is projected to remain above 25 per cent for the next few years due to the multiple risks to households’ livelihoods.
“The crisis reversed years of gains in poverty reduction and human capital development,” the update said, adding that the crisis had resulted in an additional 2.5 million poor people.
Vulnerability to income shocks has also increased with many non-poor households living close to the poverty line – 5.7 per cent of the population lives less than 10 per cent above the poverty line and a further 5.6 per cent lives between 10 and 20 per cent above it, the report said.
The World Food Programme said in July that in the face of record food price inflation, skyrocketing fuel costs and widespread commodity shortages, some 6.26 million Sri Lankans, or three in 10 households, are unsure of where their next meal is coming from.
Meanwhile, the new welfare scheme – Aswesuma – continued to draw criticism on the selection process. One of the problems in this scheme is that the authorities helped by the World Bank are trying to ensure proper eligibility of the recipients, unlike the earlier Samurdhi scheme which became a political tool for successive governments, offering handouts to political cronies and those ineligible for the dole.
So, will the current fuel price hike see a chain reaction of rising prices of commodities, transportation and other essentials? Tired Sri Lankans have been facing the brunt of the economic crisis, living on credit cards, borrowed money and are deep in debt.
Thus, when Kussi Amma Sera walked into the office room with my second mug of tea, asking whether the fish bought the previous day had gone up in price, I nodded my acknowledgement. Like every tired Sri Lankan, I am resigned to a fate of high prices and lower incomes.
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