Govt Takes Aim at Supermarkets: Price Wars Ahead

To combat the runaway inflation of consumer goods, the government is planning to introduce a new mechanism for commercialization. The initiative aiming to create a direct competition with supermarkets, which are accused of profiting from the rise in logistics costs to justify price increases.

According to sources, the State Trading Corporation (STC) will be involved in this initiative.

The government is taking action because the surge in prices is exasperating the population.

“It’s unacceptable that households are being penalized by questionable commercial practices. The government will act,” said an informed source of Defi Media .

The STC will be required to expand its scope of operation to include other common consumer products.

The goal is clear: to provide consumers with an alternative to large retail chains, which are accused of colluding on prices at the expense of citizens’ purchasing power.

“By intervening directly on the market, we want to force supermarkets to review their practices and offer fairer prices to consumers,” it was explained.

The importation of Smatch brand products (powdered milk, edible oil, dry grains, and Basmati rice) from mid-2022 prompted the government to import other food items.

The objective behind importing Smatch products was to push supermarket owners to practice a reasonable margin on these four basic consumer products. “The objective has been achieved,” said an official.

In practice, the government planned to set up points of sale in strategic areas of the country to ensure equal access for all. However, details are still being finalized.

The main opposition from large retailers is that they deny any abuse and highlight the reality of international logistics costs.

Ignace Lam, director of Intermart supermarkets, stated that “let competition play out” and that the government should not intervene.

“I wish the government good luck, but experience showed that state intervention has never worked. It’s not the state’s role to compete with supermarkets,” he said.

Nooreza Fauzee, director of Dream Price supermarkets, also defended her company by pointing out that they are also affected by the rise in logistics costs and are doing their best to limit the impact on consumers.

“We hope that a well-performing mechanism will be introduced to supply all outlets across the country,” she said.

Rajiv Servansing, director of STC, stated that his organization will adjust according to government policy.

After COVID-19, STC began importing four products: milk, oil, dry grains, and Basmati rice.

Following this, the prices of powdered milk and edible oil decreased, while those of dry grains and Basmati rice remained stable.

Minister of Finance Renganaden Padayachy assured that the government will monitor prices and take action if necessary.

“We will verify prices of products. Let it be clear that the Minister of Commerce and the Prime Minister have also said we will be very severe with operators in large distribution if they increase prices artificially.

We will closely follow what happens to prevent artificial price increases,” he said during Budget Breakfast on June 8.

The Budget annex mentioned that the law will be strengthened to deter bad practices.

Padayachy guaranteed that authorities will ensure that the additional income entering citizens’ pockets “is not eaten away.” “We have the necessary tools like ‘mark-up’ that we can put in place to calm unreasonable desires,” he warned.

Source: Defi Media