CAA to take legal action against Prima after price hike

Saturday, 7 September 2019 00:01 -     - {{hitsCtrl.values.hits}}

  • CAA says Prima increased wheat flour prices by Rs. 5.50 without approval 
  • Bakery Owners Association announce Rs. 2 increase of bread prices 

By Ruwandi Gamage

The Consumer Affairs Authority (CAA) has decided to take legal action against Prima Ceylon Ltd. after they announced a price hike of a kilo of wheat flour by Rs. 5.50, effective since midnight yesterday, an official said. 

Consumer Affairs Authority Chairman Dr. Lalith N. Senaweera told Daily FT that the decision was taken because the price increase was not approved by the CAA, and therefore, it was against the CAA Act.

Prima had taken the decision irrespective of the provision of law, thus the CAA has decided to take legal action against the company, he said. 

“We are still in discussions as to how we will go about this. However, we will certainly take legal action against Prima, as we were not informed in advance regarding the price increase of wheat flour,” he said.

Meanwhile, the Bakery Owners Association had decided to increase the price of a 450g loaf of bread by Rs. 2. According to sources, Prima had informed the Association of the price hike in writing, thus they had made the decision to increase the prices of bread.

Earlier in July, Prima Ceylon and Serendib Flour Mills Ltd., which are the two companies that share exclusive rights to wheat imports to the country, made a similar announcement and increased the price of a kilo of wheat flour by Rs. 8. 

This instigated a chain reaction with the Bakery Owners Association following suit, increasing the price of a loaf of bread by Rs. 5. However, following discussions with the Government, the flour companies suspended the price increase, resulting in the Bakery Owners Association also withdrawing its decision to raise prices of bread.

Prima Ceylon had earlier claimed that the price hike of wheat flour was due to the depreciation of the rupee against the dollar. The company had also claimed it had the right to revise prices, unlike Serendib Flour Mills Ltd., which had entered into an agreement with the Government. Prima had earlier said the Government had promised to consider a price revision but that had not taken place.