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Prices will go up – but how gradually?   2009-09-21 - SGTT

Prices look set to rise for consumers as suppliers are forced to pass on rising costs.


Supermarkets have said that 15 individual suppliers have given notice of upcoming wholesale price increases.


The prices of confectionary is proposed to increase by 5-7 per cent, vegetable oil to increase by 2.5-3 per cent, while soft drinks look set to rise by 5-8 per cent.


“Suppliers have proposed the price increases, but it is still unclear if supermarkets will accept the proposals, said Nguyen Thi Anh Hoa, the owner of Citimart supermarket.


However, Hoa said that supermarkets are all preparing to take more goods to sell in the year-end sale season. When considering the prices of import products, supermarkets have found out that the import prices of confectionary products, soft drinks, canned food, chocolate and milk all have increased sharply by 5-8 percent, while others have rocketed up by as much as 30 percent.


One confectionary producer, having completed the price list for Christmas and Tet, has outlined price increases of seven percent on average.


Nguyen Dang Hien, Director of Tan Quang Minh Company, said producers will need to raise the sale prices step by step. “A sudden 10-15 perc ent price increase would not be accepted by retailers and consumers,” he said.


Food prices have been moving up in the last 10 days after a long period at low levels. Live pork at pig farms is now selling at 33,000-35,000 Dong per kilo, an increase of 3,000-5,000.  In turn this has caused the retail price increase by 2,000-4,000 dong per kilo.


The price of food and vegetables at retail traditional markets in HCM City have skyrocketed, which has been explained by the petrol price hike.


However, after the recent price increase of 1,000 dong per litre was announced, analysts tried to reassure people that the rise would not lead to massive price increases, since suppliers would not dare to raise prices during an economic downturn.


While the vegetable wholesale prices are staying at 8,000-15,000 dong per kilo, retail prices have increased by 2,000-3,000 dong per kilo, which has widened the gap between the retail and wholesale prices to 4,000-5,000 dong per kilo.


Seafood products have also seen the prices increase by 2,000-5,000 dong per kilo.


Additionally Material suppliers all say they have to raise prices because of higher production and transport costs.


Besides, they said, the Dong/$ exchange rate fluctuation has also affected the prices. According to the General Statistics Office, the dollar price has increased by 6.36 percent in value in the first eight months of the year.


Meanwhile, confectionary and drink producers complained that the prices of sugar, milk and aromatic spices have increased, which has made production costs higher.


The sugar price was 13,000 dong per kilo on September 20, a significant decrease from some days before, but was still higher than the 9,500-10,000 dong per kilo levels in early 2009. The import prices of dairy products have increased by 15 percent, while analysts have warned they will keep rising.


The meat supply has become shorter due to the decreases in meat imports. Frozen meat imports, which satisfies 1/3 of the total demand for meat in HCM City (500 tonnes per day) have decreased dramatically since the beginning of August.

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