Producer prices accelerate to 10% in April revealing reasons for higher consumer prices

• Producer prices accelerate to 9.8% in April, from 6.3% in March 
• Supply chain bottlenecks related to lockdowns identified as key reason 

Sri Lanka’s producers are facing prices as high as 10 percent, similar to the end consumers who are now forced to foot the bill of the endless lockdowns, which has crippled supply chains and dampened business and personal incomes. 

Sri Lanka’s producer prices measured by the Producer’s Price Index (PPI) rose by as much as 9.8 percent in April 2021, from the same month in 2020, accelerating from 6.3 percent in March, reflecting that the supply chain bottlenecks created by the disastrous lockdowns are wreaking havoc by sending prices to unsustainable levels. 

Sri Lanka producer prices provide the underlying reasons how the consumer prices were pushed up every month despite the restrained consumer activity, as the producers who contend with higher prices tend to pass the full effect to the consumer to safeguard their margins. 

Apart from the supply chain bottlenecks and the higher import prices, which send producer prices up, lockdowns force producers to charge higher prices to make up for their lost sales during this period.  Mirror Business earlier this week showed that lockdowns are a massive tax on people, both financially and non-financially, as they increase consumer prices exponentially, making people poorer.

The PPI showed that the prices of agricultural produce rose by as much as 12.7 percent in April 2021 from a year ago, while the prices of manufacturing produce rose by 12.6 percent, accelerating from 10.0 percent and 8.9 percent, respectively in March. 

The prices of sub-activities under agriculture, such as farming of animals and growing of crops, rose by 17.1 percent and 12.5 percent during the year to April, so much for the agricultural renaissance touted by the government. 

Production of eggs and dairy rose by a whopping 21.6 percent and 11.0 percent, respectively while growing vegetables, cereal and other crops and growing of fruits, nuts, beverages and spice crops rose by 32.9 percent, 17.8 percent and 10.1 percent in April 2021 from the same month in 2020.  

Meanwhile, under manufacturing, the prices of making of wearing apparel, dressing and dying activities rose by 20.3 percent, manufacturing of textiles rose by 4.9 percent, manufacturing of food and beverages rose by 10.6 percent, with the latter reflecting how people are forced to spend higher prices for their processed food products in recent times.