Little change in essential food prices despite tax cuts

Traders say old stocks could not be sold at reduced rates
By Malik Gunatilleke

Two weeks after the Government’s decision to slash prices on ten essential food items, wholesale prices have hardly changed as traders say that it will take up to a month for consumers to benefit from the reduction in import taxes. Reductions in the maximum wholesale prices through import tax cuts of ten items including sugar, dhal, onions and potatoes was aimed at reducing the increasing burden of the cost of living on consumers. However, the situation at the wholesale markets in Colombo has yet to change as traders say that the current stocks of food were purchased before the import tax reduction took place.

While some traders have allegedly been forced to sell their goods at a reduced price thus incurring losses, others are not releasing their stocks into the market. Apart from the Laksathosa outlets which began selling the particular items at the maximum stipulated prices two weeks ago, wholesale traders in Pettah are still said to be unable to reduce their prices without incurring heavy losses.

Old Moor Street Trade Association president K.P. Sundaram told the Sunday Times that some pro-Government traders have been allegedly told to reduce their prices immediately or else face legal action while others are said to be refusing to release their stocks to the market.

“The reduction of prices has not taken place as the Government said it would, because it will take longer for the traders to benefit from the reduced import taxes. Some traders are purchasing basmati rice from the CWE at Rs.95 a kilo which is also the Laksathosa retail price hence such traders cannot sell this rice with any profit,” he said.

Mr. Sundaram said that prices may start to fall in another month but added that certain Government backed groups are already forcing traders to sell at the stipulated prices despite incurring losses.
He said that the price of dhal was still around Rs.170 a kilo in the market despite the Government stipulating a maximum wholesale price of Rs.140 while dried chillies cost almost Rs.100 more than the stipulated price.

Items such as big onions are being sold at Rs.110 which is Rs.45 above the maximum wholesale price while potatoes are being sold at Rs.100 a kilo which Rs.35 more than the stipulated price. Garlic and sugar are being sold at the maximum price of Rs.200 and Rs.80 per kilo respectively. Mr. Sundaram said that even though there was no visible shortage of any food items in the market there was a concern that traders would continue to hold back their stock instead of selling it for a lower price.

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