Why Mauritians Pay More and Get Less: The Cost of Living Trap

Walk into a shopping centre in Mauritius and order a bowl of noodles. Chances are you will pay more for it, and enjoy it less, than if you ordered the same dish at a train station in Tokyo. That striking comparison, made by economist and commentator Samad Ramoly in the Mauritius Times, is not just an anecdote. It points to something deeper and more troubling about how the Mauritian economy is structured.

The instinctive explanation is that Mauritius is a small island. With a population of around 1.3 million and no significant manufacturing base for food or consumer goods, the country imports most of what it sells. Shipping, insurance, customs duties and port handling all add cost before a product even reaches a shelf. Economists call this the small island penalty, and it is real.

But Ramoly argues that scale and geography alone do not explain the full picture. Other small island economies, from Singapore to Malta, manage to keep consumer prices more competitive. The problem in Mauritius, the argument goes, runs deeper: concentrated market power, weak retail competition, opaque supply chains and a regulatory environment that has historically protected incumbents rather than consumers.

In Mauritius, a small number of large conglomerates control significant portions of the retail, distribution and property sectors. When the same group that imports a product also distributes it and owns the supermarket that sells it, there is little structural pressure to keep margins tight. The consumer ends up absorbing costs that competition would otherwise squeeze out.

Property costs compound the problem. Commercial rents in Mauritian shopping centres have risen sharply over the past decade, driven partly by the expansion of upmarket retail developments. Those rents are passed on to shoppers through higher prices, whether they are buying a bowl of noodles or a pair of shoes.

Mauritius also applies import duties and value-added tax to a wide range of goods. While some basic foodstuffs are exempt or zero-rated, many processed and semi-processed foods carry levies that inflate final prices. The government periodically introduces price controls on a basket of essential goods, but critics argue the list is too narrow to make a meaningful difference to household budgets.

What this means for ordinary Mauritians is a steady erosion of purchasing power, particularly for middle and lower-income households. Wages have risen in recent years, including a minimum wage increase to Rs 16,500 per month as of 2024, but many workers feel that pay rises are quickly absorbed by the rising cost of food, transport and housing. The disconnect between nominal income growth and real living standards is a recurring frustration in public debate on the island.

For expats, retirees and investors considering Mauritius, the high cost of living relative to regional and global comparators is increasingly part of the calculation. The country markets itself as a premium destination, but premium prices without premium service or product quality risk making it less attractive over time.

Ramoly's broader point is that Mauritius needs structural reforms, not just price controls or one-off subsidies. More competition in retail and distribution, greater transparency in supply chains and proactive enforcement by the Competition Commission of Mauritius, the statutory body responsible for preventing anti-competitive behaviour, would do more for consumers than any short-term measure.

Until those reforms happen, the noodle bowl comparison is likely to remain an uncomfortable truth.

Source: Mauritius Times