By Raffique Shah
April 21, 2016
I find it almost amusing that some grocers who are caught dipping their greedy hands deep inside the inside consumers’ pockets, cry foul when their names and outrageously high prices are exposed through advertisements posted by the Consumer Affairs Division of the Ministry of Trade.
In immediate response to being named as selling certain foodstuff way above the norm in the business, they claim the prices attributed to their establishments were wrong, and they issued “corrected” versions that were between $5 and $10 cheaper-per item.
The Ministry stood by its published prices that were collected and collated some time after Government reduced VAT from 15 percent to 12.5 percent.
I must confess that I did not scrutinize the extensive list thoroughly. I browsed through looking at certain basic items and price differences that were significant. I expected groceries located in far-flung districts such as Toco, Mayaro and Cedros to charge more because they will have had to bear higher transport costs.
That turned out to be misleading: some of their prices were actually cheaper than those in the larger supermarket chains, and in more centrally located shops. And generally, the differentials were marginal.
I was pleasantly surprised by the Ministry’s publication of the list because I am aware of how influential some of these establishments are, and why the Government will not want to be seen as waging war against them.
So the decision to publish and be dammed was welcome. I hope the exercise continues relentlessly, preferably in the Sunday newspapers, at least on a monthly basis.
The purpose cannot be to have consumers chasing the cheapest prices for specific items across the country-only foolish people would do that.
It should have two aims: first, consumers could use the list to calculate the prices of a “basket of goods” at a few groceries that are conveniently located for them, and if they come up with savings of $100 or more per month, which is substantial for those in the lower income bracket, then buy from where it’s cheapest.
And second, the list must be seen as a legitimate “name and shame” exercise that will bring to heel the price-gougers who are exploiting the revised taxation schedules in the absence of price controls.
If the decreases announced by the “offended” grocers are anything to go by, the list has been an instant success.
In any recession or depression, there are businesses that thrive, a few by fair, innovative practices, but many by foul. Food is the easiest commodity to exploit in harsh economic times.
During the “Great Depression” that started in the USA in 1929, among the large corporations that made increased profits was the Campbell Soup Company. Its president, Dr John Torrance, declared in 1930: “People must eat even in less prosperous times…the only difference being that greater care is exercised in spending of the family income…”
There is nothing wrong about any business making profits. If they didn’t, they’d go bust.
But there is a critical difference between being profitable and making obscene profits off people, especially the poor and middle classes who must buy essentials like foods and medications.
The food business is characterized by high-volume sales with low profit margins-or so it ought to be. But there are always unscrupulous operators, and they are the ones the ministry must name and hopefully shame, in the absence of laws or regulations that make price-gouging a criminal offence.
Another basic commodity that some dealers who control it are exploiting is cooking gas (LPG).
Approximately 90 per cent of the 400,000 households in the country use LPG for cooking (the others use electrical ranges), and these include the very poor.
When VAT was reduced from 15 percent to 12.5 percent, the price of the 100-pound cylinder ought to have declined from $130 to $124.31, or say, rounded off at $125. It didn’t-which means the distributors were pocketing an additional $5 for every cylinder sold.
This may appear to be an insignificant sum, except that if the average household uses one pound of gas a day (I know it’s more than that), the distributors “pocket” an additional $20,000 a day, or $600,000 a month, or more than $7 million a year.
That does not include their profit-margin, which could be as high as 20 percent.
A final word on the increases in fuel prices: when the UAE removed the subsidy on gasoline last August, the Gulf State’s energy minister told motorists who grumbled, “If you can afford a vehicle, then you must be able to afford fuel for it…at market prices.”
And since the 15 percent increase in the price of diesel is only a miniscule proportion of overall transport costs, the impact on goods will hardly be more than one-to-two percent.
Anything more is highway robbery. And these be-suited bandits rob all of us every day.