Prices of confectionary items to increase by 8 – 10% this week

• Adherence to COVID-19 factory guidelines pushes up raw material and production costs
• Industry players note most manufacturers will go out of business if price increases not controlled 

By Shabiya Ali Ahlam
Prices of all confectionary items and products will increase by about 8 to 10 percent starting this week, Mirror Business learns, as the cost of production has expanded by many folds.

Stakeholders of the confectionary industry shared that with the cost of raw materials, and cost production, due to measures taken to adhere to the COVID-19 factory guidelines, being increased considerably in the recent months, manufacturers are left with no choice but to pass on the burden to the consumer.

Last week, the price of wheat flour increased by Rs.6.00 a kilo, adding to the already mounting cost of production of confectionary and bakery items.

Wheat flour is the main ingredient in conventional bakery products such as cakes, bread, biscuits, and pasta products.

The manufacturers are bracing themselves for another hit to their operating costs with the government announcing an increase in fuel price over the weekends.

“We have been managing with great difficulty since the pandemic hit, but now the production costs due to increase in raw material prices are eating into our profits. We are not making profits anymore, it is only about survival now and how we can continue to pay salaries,” an industry stakeholder told Mirror Business on the grounds of anonymity.

He added that while the larger players are just about managing to stay afloat, the smaller manufacturers have moved towards the loss-making territory.

“If these price increases aren’t controlled and if it continues this way, most manufacturers will go out of business. We cannot continue to absorb the shock, and there is only so much we can pass on to the consumer,” added the stakeholder speaking on behalf of the industry.

According to statistics released by the Department of Census and Statistics, the National Consumer Price Index (NCPI) increased to 5.5 percent in April 2021 from 5.1 percent in March 2021.

Meanwhile, the Colombo Consumer Price Index (CCPI) increased to 4.5 percent in May 2021 from 3.9 percent in April 2021. 

Sri Lanka’s food inflation increased to 9.9 percent in May 2021 from 9.0 percent in April 2021, while non-food inflation (Y-o-Y) increased to 2.2 percent in May 2021 from 1.8 percent in April 2021.