Removal of price control will hit poor hard

[posted 19 Nov 2009, 1145]

The interim government is definitely ill-advised on its decision to remove price controls from 146 basic consumer items.

“It is a shocking and irresponsible move which will hit directly at the stomachs of the poor at a time of galloping inflation,” said Labour Leader Mahendra Chaudhry.

A recent survey of basic food and consumer items by the Consumer Council has shown that prices have generally doubled, in some cases they have shot up by as much as 200% since the devaluation of the dollar in April.

A move by the Prices and Incomes Board to bring an additional 24 items under price control was rejected by the interim government. And yesterday it made the shocking announcement that controls will be removed from an additional 146 items that were already under price control.

This will leave the consumers, low income workers and the poor in particular, totally at the mercy of unscrupulous merchants and profiteers.

Commerce Minister Aiyaz Khaiyyum tried to justify this anti-people policy with the claim that “government is pushing ahead with developing an economy that is investor and business friendly”.

“Doesn’t government have an equal responsibility to protect the people at large and ensure that ordinary consumers are not ripped off by unscrupulous merchants and retailers?” Mr Chaudhry asked.

Even in free market economies the State imposes controls on basic food and household items despite these countries having strong consumer protection agencies.

Mr Khaiyyum’s argument that price controls distort the market is equally flawed. The items in question or the raw materials used in their manufacture are largely imported and have little impact on local market conditions.

Market distortions and upheavals only take place in the absence of effective regulatory controls. Free market serves only the rich and the powerful and they tend to get their way at the expense of the poor.

Prices of all goods including food items have shot up astronomically, and often unjustifiably, in recent months particularly after the 20% devaluation of the Fiji dollar in April inflicting untold hardship on families in the middle and low income brackets, not to mention the very poor.

This is shocking. One expects any responsible government to act in such extreme situations to protect at least the poor and not leave them open to commercial exploitation.