Young professionals : price ceiling, a must or a drawback?

A price ceiling is usually a government-imposed price control or limit on how high a price is charged for a product. With the recent price hikes, some experts are deliberating about price ceiling in order to protect consumers. However, opponents argue that price ceilings can lead to serious issues and in Mauritius, they will not work in our market system. Our young professionals debate the issue.

Fahmeeda Bolaky: “We should impose a maximum price”

An expert in accountancy, Fahmeeda admits that to some extent, on certain products, we should impose a maximum price, for example rice, milk, and canned food, amongst others. “Approximately 48% of Mauritian labour force get a remuneration of less than Rs 15,000 and only around 4.9% of our local population get a salary of more than Rs 50,000 monthly. In addition, approximately 500 workers according to CTSP, derive a monthly income of Rs 1,500. Hence, it is clear due to our current local cost of living that we are not a high income economy. Hence, we need to protect these people who earn a low remuneration in order to make sure they get access to basic needs and they are not deprived of basic food and nutrition.”

She also adds that some suppliers are charging outrageous high prices for limited goods or services simply because they are able to do so freely, hence price ceiling is sine qua non. “Absolute poverty in some regions of our island is alarming. A proportion of our population are deprived of an adequate income and unfortunately, the fertility rate in poor families is higher than the families belonging to the middle class. So, we must make sure these low income parents can provide basic needs to their children to get a good nutrition and acquire a good education. Furthermore, in future, a monopoly power may take place in our market if the government does not apply a price celling on certain products due to the emergence of certain large outlets.”

However, she argues that price ceiling may have negative impacts too. “Price ceiling leads to an increase in demand but there will always exist a shortage, as suppliers will be discouraged of producing goods when they are unable to set their own prices. They will also provide the population with poor quality products.”

Dev Chooramun: “Price ceiling can be detrimental”

Dev Chooramun states that Mauritius is looking forward to becoming more competitive in terms of the buying and selling of goods on the local market and hence a self-regulated market is more appropriate so as to boost our economy.   “If government applies a price ceiling, this is going to be detrimental to the development and sustainability of Small and Medium Enterprises seeking to pave a way in our small and (by then) saturated market.  A legal price set below the market equilibrium price will inevitably create a shortage in the supply of the targeted product(s) as demands increase.  This leads to a fall in competitiveness.  It also entails the death of enterprises involved in the manufacturing and the sale of these products which eventually disappear from business and thus from consumption.” He believes that setting a price floor through appropriate legislation for a minimum wage will allow fairness in terms of the cost of living of all Mauritians. 

Meenaxhi Dodla Bhemah: “It is right to apply a price ceiling”

Meenaxhi states that in order to protect consumers, it is right to apply a price ceiling. She questions the price hike of various products. “Nature has never created any price tag on sunlight, rainfall, or oxygen to allow us to survive. Why is our current economy of exchange not inclusive for growth for all? From an active citizenship perspective, do we question the ‘why’ of price rise of these products before thinking of our protection? Are these products becoming scarce? Are costs of production increasing? Are people looking for higher pay? Do we look for alternatives? If yes, do we try to create cooking gas from green waste (knowledge that our chemical engineering students are supposed to already know), do we go for green fertilizers, have we installed electric recharge sockets in parking spaces yet to encourage the use of electric cars, can we use recycled plastics with cement instead of iron bars for construction purposes?”

Naeem Moosbally: “Price ceiling seems to be one appropriate mechanism”

A caring government will protect its people and price ceiling seems to be one appropriate mechanism to prevent consumer exploitation and alleviate the burden of the lower and lower – middle class family, says Naeem. “Price ceiling aims to protect consumers from being exploited by vendors who may wish to charge unrealistic high prices for their products. However, it should be noted that the government should not make an abuse use of its power by imposing price ceiling in every corner but it should rather impose price ceiling on needy or basic goods. For example, the price of tomato normally experiences significant increases after a cyclone. It is a rightful argument that tomato is scarce after a cyclone but why should consumers pay the price of a natural disaster? If one pound was being sold at Rs 50 before a disaster, the price might well escalate to Rs 100 after same. This is where the government should intervene and impose a price ceiling. Therefore, the tomato vendors will not be allowed to charge a price, say above Rs 75 and consumers will therefore be protected from such significant price raises. If the vendor charges a price above this price ceiling, he may be liable to fines, imprisonment or deprived of his trading licence,” avers the accountant.