It has been made public that the high price increase seen on bread in Addis Ababa city is due to the new 2.5 percent sales tax imposed in connection with the lifting of government price control, and the surge in flour input prices.
As it is known, the 90-gram bread that was previously sold for 10 Birr in the capital has now increased to 15 Birr, and the 130-gram one to 25 Birr; while consumers are bitterly expressing that the large-sized 250-gram bread has doubled in price and is being sold for up to 50 Birr.
This means that for the broad community with low incomes and families with many members who are struggling to cover their basic daily sustenance, the rising price of bread at this speed shows that an extremely difficult situation has been created where they cannot meet their daily food needs and buying bread itself is seen as a luxury.
On the other hand, in some areas where prices have not increased, bakeries are significantly reducing the size of the bread, meaning reducing the 90-gram one to 70 grams and selling it, which is an indicator that the life on the ground is becoming difficult.
Although there are high complaints about this practice and price surge because it does not consider the purchasing power of the society, bread producers and traders present their own reasons for this strict measure.
One of the reasons they mainly raise is that the price of flour has surged by up to 24 Birr per kilo, and the increase made on edible oil as well as the high increase in the price of sugar and house rent are notable.
Therefore, they express that they were forced to increase the price or reduce the grams in order not to exit the business entirely as they could not withstand this input price inflation.
However, behind this surge in flour and bread prices, the new tax and market directive implemented by the government is cited as the main reason.
It is known that the government has completely lifted the price ceiling control that was previously applied to bread and flour, and has made the market free.
Because of this, alongside this free market, they decided that producers should pay a 2.5 percent sales tax from their total sales, and in order to cover the tax and maintain their profits, they were forced to increase the price of flour.
The Addis Ababa Trade Bureau, which performs control work on this and other transaction processes, for its part, although it confirmed that it does not directly control the price of bread and that the market is free, it announced that the profit margin has a legal limit.
However, it has been stated that the maximum profit amount a trader can get above their input cost is only 20 percent, and profiting more than this is unjust enrichment, which is punishable by law.
