PRICE INCREASE FRACTIONS

Ashburton Guardian, Volume 68, Issue 139, 24 March 1948, Page 5

PRICE INCREASE FRACTIONS

GOVERNMENT CONTROL PROPOSED (P.A.) WELLINGTON, March 23. The Price Control Division has under consideration a scheme to control fractional margins where price increases granted more than cover the increased costs which form the basis of the change. This was disclosed by Mr . P. Lewin, in his submissions for the division, during the hearing by the Price Tribunal of am application for an increased price for sugar. An increase of 3d in the retail price of sugar, he said, would mean £7 a ton increase in the price from the Colonial Sugar Company’s refinery. This was los lid a ton more, than tlio increased cost of production agreed by the division as necessary to provide an established tax-free profit of o per cent, to the company. The company had suggested, but this was not supported by the division, that this fraction should be used to establish a buffer reserve to cover a further fluctuation in production costs. “The question whether the 15s lid should belong to the company or be held on account of the Government is relevant in a. consideration of any development in distributive arrangements or of any other respect,’*- said Mr Lewin. “The division, your Honour. contemplates such a development in the distribution field.”

Suggested Courses

The tribunal had four courses, Mr Lewin said. The application could he declined, but ihat would ignore the increased cost and contradict the established practice of the tribunal. The price could lie increased by £6 17s od a ton, equal .to fd per lb retail increase. The price could be held at its present level and the company could be offorded relief by another way. principally by the re-esial)lisbment of subsidies, or finally only those costs should be admitted which wotild-place the company on the same profit basis as previously considered equitable. “An increase of 3d per lb will press heavily not only upon the direct consumer of sugar but also upon the consumers of the products of those industries which are considerable users of sugar,” said Mr Lewin. “The pro ducts in question include jams, jeb lies, confectionery, ice cream, cake, biscuits, beer and sauces. While the division is not- in a position to say authoritatively that a £1 increase in the direct price of sugar involves say £5 in the aggregate in directly and indirectly affected prices, it can say that, in fact considerably more than the actual increase in the direct price of sugar will be reflected in the prices of sugar plus those products of which sugar is an important constituent,” The hearing was adjourned until tomorrow.