Soaring food prices concern consumers

12/03/2008 15:25

Soaring food price rise has played havoc with household finances. Consumers are feeling the pinch as they have noticed that the weekly supermarket bill is getting larger while the trolley load is getting smaller.

Prices of edible oil, sharp and flour, noodles, onion, breakfast crackers, potatoes, ghee, powdered milk, arhar and vegetables, is now costing more despite the interim government’s initiative to reduce the increase in price of food.

To ease consumer hardship the Interim government had introduced a temporary price control as a measure to prevent rapid price increases and maintain a "normal and stable" price system in 2007 by reducing the markup percentage. It is obvious that the government attaches great importance to price rise situations, and this reflect its resolve to restrain inflation.  Import duty of food items were further reduced in November 2008 budget.

However, the latest data from market surveillance for example shows that the prices of gravy beef, marlin, sunfish, bread, powdered milk, and chicken thighs have risen despite reduction in import duty from 27% to 15% in 2008 budget announcement.  Unfortunately, the good intention of the Interim Government to ease consumer burden in difficult economic circumstances is not reaping the desired results.

Increase in price of wheat, in fact, is starting to behave like fuel in the market place.  Both wheat and fuel are struggling to keep up with the global rising demand. Anything made out of grain costs more including chicken, cows and pigs that feed on grains.

It is barely three months when the duty of gravy beef was reduced in the November budget but the Council’s market surveillance found the price of gravy beef has since increased by 16 per cent. The Interim Government also reduced the fiscal duty on imported chicken. It is a setback because most consumers purchase locally produced chicken.

The Council found that the price of a kg of onion increased from $1.33 in Sept 2007 to $1.48 last month. Similarly, potatoes increased from $1.07/kg to $1.42, almost 33% increase in price. The Council received complaints on powdered milk and ghee as well. The price of powdered milk increased by 10% whereas the price of 750ml ghee increased by over $3.00 ($5.25 to $8.69).

Other non-regulated items such as panadol, toilet paper, safety match, laundry soap also showed significant increases in price. It is interesting to note that the toilet paper is decreasing in size but the price is increasing.

It is bad news for ordinary families who will find it harder than ever to make ends meet. The price hike, especially in foodstuffs, is very sensitive issue as consumers have a relatively low disposable income and food accounts for a major part in people’s daily spending. We now have falling real take-home pay, soaring food and fuel costs and rising commodity prices, which are made worse by the weakening Fiji dollar. However, the return on deposits is still below the inflation rate, indicating a loss of purchasing power if money is put into banks.

Under such circumstances, introduction of effective counter-inflation measures naturally becomes the government’s primary goal. The Council therefore looks forward to Government to take necessary action.