Consumers pinch pennies as living costs defy inflation data- Harischandra Mills

Harischandra Mills PLC, a household name in Sri Lanka, navigated a complex economic landscape in the 2024/25 financial year, where the official statistics showing a slowdown in inflation clashed with the reality of soaring living costs for the average consumer. 

The company’s latest annual report reveals how this disparity has reshaped consumer spending, boosting its core food business while presenting significant hurdles for its other segments.

While Sri Lanka’s economy showed signs of recovery with a headline inflation rate (CCPI) falling to -1.7 percent by end-2024, the report underscores a critical disconnect felt by the public. 

“This disparity between statistical inflation and actual living costs led to shifts in consumer behaviour, with the customers becoming increasingly price-conscious and adjusting their buying patterns accordingly,” the company stated in its Management Discussion and Analysis.

This observation is supported by national data cited in the report from the Census and Statistics Department, which found that in 2023, over 90 percent of households faced higher monthly expenses, driven primarily by food inflation.

For Harischandra Mills, this consumer belt-tightening translated into a mixed financial performance. The company posted a marginal revenue increase to Rs.6.32 billion, from Rs.6.30 billion the previous year. However, profit before tax for the PLC saw a modest 4 percent decline.

The standout performer was the company’s food sector, which saw a robust 42 percent growth in profit and a 9 percent increase in sales. This performance, driven by a strong demand for its traditional product portfolio, suggests that in tough times, the consumers are prioritising trusted, essential food items. The company attributed the success to improved production efficiencies and a decline in some input costs.

In stark contrast, other divisions faced significant headwinds.  (NF)