Ripple effect : the price war is on

With the increase in fuel price since last Friday, Mauritius has been witnessing a series of upheavals. While some economists termed this increase as disastrous, other described it as a negligible occurrence. In the debate that follows, economist Pramod Jaddoo reveals that the impact of this increase will affect various sectors of the economy while Deepak Benydin states that some stakeholders are exaggerating.

The opposition has unified as one voice to protest against the increase of fuel price in the coming days and trade unionists are also voicing out their discontent. Bakers are asking for an increase in the retail price of bread and transport operators want a fare hike. The Minister of Transport, Nando Bodha, has stated that there will be no increase in transport fares. On the other hand, school buses are increasing their fees by Rs 100 and taxis also are considering raising their fares.

Deepak Benydin : “There are over exaggerations”

Trade Unionist Deepak Benydin does not understand how the increase in price of fuels will cause other prices to hike. He argues that often in Mauritius we over exaggerate. He questions why when there is a decrease in fuel price, the other stakeholders do not decrease their prices as well. “The price of fuel has known an increase of around Rs 2 but other stakeholders in different sector, mainly those in the transport system, are willing to opt for an increase of Rs 100 or above for their services. For instance, school buses are asking for an increase of Rs 100 and above. The same applies to small shops and hawkers who are already screaming for an increase of a minimum of Rs 10. This makes no sense. The same people will never decrease their price when the reverse happens.”

There is an abuse. Mauritius does not promote a fair market price as practised in other countries like Canada."

He believes that some people just take advantage of the increase in prices to do more business, thus penalising consumers. “There is an abuse. Mauritius does not promote a fair market price as practised in other countries like Canada. There should have been laws and regulations so that the price margin does not differ to a great extent, as it is often the case. At the end of the day, the population loses.”

He does not agree that all prices should go up and that some people are willing to protest. “It is not justified for just Rs 2, people are willing to protest. Protests are last resorts. The stakeholders who found that they are at a loss with this increase could have opted for negotiations.”  

Pramod Jaddoo : “It is catastrophic for the economy”

Economist Pramod Jaddoo explains that the price of fuel has a direct impact on the transport systems and production of the country. “It is a vicious circle. It is an inevitable consequence that the increased price of fuel will impact on prices. Mauritius will be facing a domino effect whereby the different sectors like agriculture, transport and manufacturing among others will have to bear the consequences. Price will escalate,” he reveals.

According to the economist, Mauritius is already witnessing an inflation rate of 6.5% and it is definitely a serious issue. “There is no doubt that the inflation rate can increase rapidly and now with all the rising prices to follow, people will suffer. If prices are increasing considerably, the level of poverty will also increase. Instead of working towards poverty alleviation, it will be more like widening the gap.”

There is no doubt that the inflation rate can increase rapidly and now with all the rising prices to follow, people will suffer."

He states that the benefit of the 10 cents fall on bread price seems to disappear instantly. “Bakery shops and other hawkers are already envisaging for an increase. Besides, the price of famous street foods had already known an increase from Rs 10 to Rs 12. Now they are willing to increase again. It is unfortunate that we do not have control over various prices. At the end of the day, it is the consumers who are at loss,” he says.

For Pramod Jaddoo, an increase of Rs 200 in salaries will not change anything in the life of many living under poverty line. “Some people are already sacrificing on food. They barely have three healthy meals per day and now with such a burden, how will they survive? It is apparent that the health sector will be impacted as well. If the population is under-nourished, how can you expect the productivity of the country to remain stable or improve?”

He argues that the State Trading Corporation should have been more reasonable and come with better solutions rather than an increase. “The STC should have known how to balance its account. They cannot put the burden on the population either for the Metro Express or the case of Betamax. It is totally wrong.”

As highlighted by him, till now the economy has not yet taken off as it should have and we are still very far from the ‘second economic miracle’. “We have been hoping for a better economy. We will be in 2018 soon and nothing concrete has been achieved. It is catastrophic for the economy.”