Business Times

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.

This Christmas - Give a hoot, don't pollute
At a time of year when we dedicate ourselves towards cherishing our nearest and dearest, it is easy enough to overlook that one constant in our lives who has been there since even before our very first breath - Mother Nature. As such, at a time when gift giving and excess is the order of the day, it is important that we take every precaution to not overly waste nor throw away the runoff of our rampant consumerism in the form of packaging which we often could have easily done without.

One way to minimise your environmental impact, according to local crusader for the ecology, the Environmental Foundation Limited, is to avoid buying products packed with Regifoam or Styrofoam as there is no way of safely disposing or even recycling these materials, they can only be re-used. Awareness about this issue has been spreading and there has been a decrease in Styrofoam / Regifoam use in packaging in recent times. But if you are still offered a Styrofoam pack with your lunch packet be sure to turn it down and let the restaurant know what they've done is wrong.

Additionally, save your wrapping paper and boxes from this year for next year's present. Creating a whole new tradition of thrift this season will also allow you a greater budget for other, more important things. You can also use newspaper for wrapping, a practice that is becoming more and more accepted in today's environmentally conscious society. At the very least don't throw anything away; plastics, newspaper, cardboard boxes, wrapping paper, etc. can all be recycled by the Colombo Municipal Council and Abans Environmental Services or even re-sold to your local "bottle and paper man".

Finally, a thought to bear in mind, almost 80% of plastics bottles today can be recycled into other products, so be careful of what you throw away; it can always have a “second life”.

Christmas budgeting
Since Christmas is the season for giving, we at the Business Times want to make sure that while you give to others; we give you some advice which will help you survive this expensive time of year. As such, we spoke to a number of experts on your behalf.

From professional financial advisors to some very down to earth executives and even housewives, some would argue the most prudential of the lot. The best way to tighten the strings on your purse is to try and bring joy by being there for people when they need rather than buying stuff at Christmas, according to Pubudu Wijayasundara, Senior Project Executive, DFCC.

“But if you really need to buy, try to think before hand whom to give and what sort of thing to buy for each of the concerned before going shopping. Impulse buying at seasonal times is not a good way to spend your hard earned money,” says Mr. Wijayasundara. He adds that it is always important to remind yourself of how much you can spend on gifts whilst leaving enough money for essential expenses during the season. "This will prevent you from getting into debt,” he said, noting that minimising spending on parties is a must during the season.

Stock analyst Geeth Balasuriya says tightening your belt at this time of the year would be a tough task even though inflation (statistically) has dropped considerably this year. “The consumers still feel the heat when they actually start shopping specially during a festive time like Christmas. So, one strategy not to get into debt would be to avoid excessive spending (only buy necessities) at least until income levels get adjusted.”

Research analyst Srimal Liyanage indicates that the rate of inflation is reported to be low only because the prices of consumer items are overly high since the country experienced a very high inflationary situation last year. “Consumer items that are not essential for living (however has become essential for seasonal entertainment) have risen sharply (moreover those items are sometimes categorised as non essential goods and taxed high) and the increasing demand during the period may cause a temporary increase in price levels,” he said. He also noted that, while the celebration cannot be avoided just because consumer goods are so expensive, it is always better not to get into too much debt since the country's economy is not that stable.

“This time, better planning is required for Christmas. Always budget your spending. Plan what the highest priority things that you have to do and can be done only during the season based on social standard and need. Limit expenses that are not essential for your lifestyle and focus on a cost effective celebration,” was his advice. “It is always better to have a good understanding of your purchasing power and to what level it is affordable”.

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