A sugar high fears that price increase may lead to further inflation

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The surprising price jump of a kilo of sugar from 15.40 to 18.40 happened last Monday, January 18 leading to anxious speculation that such a move may lead to further inflation on other sugary foods and drinks.
The consumer association announced the 18 percent rise with very little notice through public media outlets. Following the announcement, hoarding of sugar by merchants has been noted in markets.
The Sugar Corporation’s study into the price of sugar, submitted to the Ministry of Trade, stated that the continuous increase in production costs have forced the corporation to suggest an increase to prices.
The Corporation’s Communications Director, Zemedkun Tekle said, “We cannot continue to work with the previous price, the machines we need to plant in the factory, the labor cost and materials needed to produce sugar is on the rise. So we have no option but to raise the price.”
However, the Director admitted that proper awareness should have been given before the application of the new price.
Consumers, who purchase sugar from the Consumers’ Association, have slammed the price increment.
“I don’t know what is happening in the sugarindustry, the government has been telling us repeatedly that new sugar factories are under construction and that sugar production is increasing so Ethiopia will stop importing sugar and begin exporting. But the reality tells we are getting a price hike and production is not meeting with the people’s demand,” said Mikias Megerssa, an Addis resident.
“It is fair to increase the price with a few cents, it is fair to increase the price with a birr but such a high jump does not consider people’s ability to pay,” he added.
The Trade Minister did not respond to such criticisms but reiterated that the Ministry will strictly control the market to ensure that there are no unfair price hikes associated to the sugar price increase.
Sugar factories currently owned by the Sugar Corporation are Wenji-Shoa, Finchaa, and Metehara. The biggest sugar factory with the largest production capacity is Wenji-Shoa sugar factory, producing 174,946 tons of sugar per year. New factories to be completed soon are expected to cover the 2 million quintal shortfall in local production; currently, Ethiopia’s demand for sugar is about 6.5 million quintals per annum, with 3.3 million quintals covered by local production.