Despite the post-crisis Christmas and New Year shopping spree, the retail business has witnessed that clients are cautious in spending money, The Daily Morning Business learnt.
Speaking to The Daily Morning Business, Sri Lanka Retailers Association (SLRA) Founding President Hussain Sadique said: “There are sales, but it’s not the best season.There is no excitement, only important goods are purchased.”
The sales do not necessarily indicate any growth as they are “very much” similar to that of last year as the purchasing power has reduced, Sadique elaborated.
The Daily Morning Business, also inquired what could be expected upcoming year in sales following the value added tax (VAT) in place which SLRA Founding President responded saying the sales might stagnate even further as the customers will continue to be cautious in purchases until the impact on VAT disappears.
Sadique elaborated that VAT, in fact, is a burden to the consumers without a visible improvement in the efficiency of tax collection. Otherwise, medium-level unorganised systems in the economy would benefit unlike the ones who are organised.
Speaking of seasonal shopping, Consumer Rights Activist Asela Sampath told The Sunday Morning last December that, “There is an increase in prices of goods in the market compared to the previous year. However, they also have a certain capacity to purchase at higher costs at present. The issue is that the seller is inflating prices over and beyond production costs. This is mostly why consumers are facing issues – the producer isn’t receiving the proper amount.”
University of Peradeniya Department of Economics and Statistics Professor Wasantha Athukorala also expressed similar sentiments to The Sunday Morning saying, “In 2022, price levels came to a very high level and we are still at that level, since the prices didn’t decrease. Therefore, consumer purchasing power is very low and their ability to purchase even the essentials are at a low level.”
Based on his observations, he added that the consumer purchasing behaviours would not see a marked change compared to last year despite the festive season.