Consumers In Thailand Must Brace For More Price Hikes

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FINANCIAL STRESS

Consumers must brace for more price hikes

By Business Reporters

The Nation1

If fuel costs don't come down, some manufacturers plan to raise prices

Bad news for Thai consumers: palm oil, sugar, soybean oil, eggs and pork have all seen price hikes - and rises for other products are still to come.

The first-quarter headline inflation of 3.01 per cent was mild, based on the BOT forecast of 3-5 per cent for the entire year. More price hikes are on the cards in the remaining months of the year, driven by natural disasters that spark supply shortages, fuel prices that push up transportation costs, as well as the cost of petrochemicals-based raw materials.

According to a survey by The Nation, if fuel prices do not ease and stay above annual average forecasts, some manufacturers are ready to raise prices, probably in the second half of this year. The good news is that competition will discourage some manufacturers from doing so, for fear of losing market share.

Boonchai Chokwatana, chairman of Saha Pathanapibul - a major producer of consumer goods including Mama instant noodles - said that whether the company would need to raise prices would become clearer in the next couple of months.

"We will delay the price adjustment despite the higher raw material costs. During this period, we will focus on absorbing the costs," he said.

Raw materials for instant noodle and cleansing goods, such as detergent, dishwashing liquid and soap, have become more expensive. Instant noodles, palm oil and wheat flour - which account for 80 per cent of total raw material costs - have seen their prices rise sharply since the end of last year. If it becomes unavoidable, Mama prices will be raised from 50 satang to Bt1 per packet.

While admitting that oil prices are affecting the cost of living, Boonchai also urged the government to campaign for a cut in oil consumption. It should also monitor manufacturers and vendors carefully, given that hoarding could drive product prices to exorbitant levels. However, he admitted that the government would need to loosen the grip on some manufacturers who really need to raise their product prices to cope with heavy cost increases.

Vikrant Komalaputra, executive director of the Thai Food Processors' Association, said some food processors had already increased their retail prices. However, most members of the association, who mainly produce canned food, insisted they would maintain the current prices until the end of the first half of the year to ensure minimum impact on consumers.

"We will see if oil prices in the second half create a bigger impact on production costs," he said.

But raising prices is sometimes not the final answer, particularly in fiercely competitive markets like fruit juice.

Chatchai Boonyarat, chairman of Malee Sampran, a major producer of fruit juices, said the company would not increase retail prices despite higher costs of raw materials and transportation. Yet, to survive during this tough time, it will temporarily cut its promotion and advertising budget.

A source from a major Thai seasoning sauce manufacturing firm said competition dictated price movement. As such, the prices would be maintained despite higher raw materials and transportation costs.

According to the Internal Trade Department, electric wire, rubber tyres, lubricants, car batteries and soap are all under close scrutiny, as their prices could be raised soon. The prices of condensed milk, instant coffee, salt, shampoo, hair gel, body power, dish washing liquid, helmets, gypsum, PVC, house paints, agricultural equipment, medicine, student uniforms and electrical appliances could also be raised, but not in the first half of the year, the department said.

Price hikes are not expected to be confined to consumer goods prices, but will also hit some service sectors.

Fortunately, competition ensured that mobile-phone service fees would not be raised soon. A source from Advanced Info Service, the country's largest mobile-phone operator, said rising living costs were not a factor to urge the telecom operators to increase or lower the airtime rates.

Whether the telecom operators adjust service fees depends on competition and service demand. Currently the average airtime rate of cellular services is Bt1 per minute.

However, hotel room rates could rise following a three-year period without rises.

Prakit Chinamourphong, president of the Thai Hotels Association (THA), said hotel operators would increase room rates by an average 5-8 per cent this year, due mainly to higher oil prices.

In recent years, hotels have been unable to raise prices due to lack of demand caused by political problems. Average room rates at luxury hotels in Hong Kong and Singapore have jumped to almost three times the price of those in Bangkok.

Apart from hotels, many airlines are mulling higher fuel surcharges due to higher jet fuel prices. So far this year, Thai Airways International has already adjusted fuel surcharges twice. Thai AirAsia last month also halted the Bangkok-Taipei route due to operating costs.

Werachai Wipatavit, executive vice president sales and marketing and headquarters general manager of Siam Kubota Corporation, said the company would not increase the retail price of its farm machinery this year as it would bring more trouble for farmers who already face higher costs of production.

"Although production costs have increased gradually following higher oil and raw material costs, price increases will be the last option for the firm," he said. "In order to offset lower income, the company plans to rely less on imported spare parts from overseas by using more domestic supplies. The company will also emphasise selling larger volumes as a strategy to boost sales, instead of increasing prices of each product," he said.

At one point, oil prices had risen nearly 30 per cent since the end of last year. The International Monetary Fund recently forecasted global oil prices would average US$107 a barrel this year and US$108 next year, 20 per cent above its previous forecast, due to stronger-than-expected global petroleum growth last year and a less-than-enthusiastic supply response. Notably, the Bank of Thailand forecasts economic growth of 3-5 per cent based on the expectation that Dubai crude will average less than US$100 per barrel this year.

Good news came last week when oil prices plunged thanks to reports that indicated economic weakness in the US and Europe.

Gains in oil prices in New York were limited to 10 per cent. On Friday, crude for June delivery dropped as much as US$5.17 to US$94.63 a barrel in New York.

According to a Bloomberg survey, 15 of 30 analysts, or 50 per cent, forecasted oil would decrease through May 13. Ten respondents, or 33 per cent, predicted prices would increase and five projected little change.

This may soften price pres-|sures, lessening the need for rate increases.

-- The Nation 2011-05-09

[bushwacker]

"Werachai Wipatavit, executive vice president sales and marketing and headquarters general manager of Siam Kubota Corporation, said the company would not increase the retail price of its farm machinery this year as it would bring more trouble for farmers who already face higher costs of production."

And if you think that we believe your reason for not increasing prices, then you ARE MORE STUPID THAN YOU THINK WE ARE!!

Hihihihihihihihi

[zzaa09]

Come the revolution. When the dependency on them becomes lessened as self-sufficiency increases amongst the population again.

[BEENTHEREDONETHAT]

Keep the price the same just reduce the contents in the package, that does not show up as inflation but ends up costing you more.

[OZEMADE]

99% of goods moved around Thailand are moved around by trucks or ute's. I am sure that most of them run on Diesel and the price of this fuel has not gone up at all.

[dumball]

'BEENTHEREDONETHAT' timestamp='1304913727' post='4410874']

Keep the price the same just reduce the contents in the package, that does not show up as inflation but ends up costing you more.

The reasoning behind that stratagem is apparently that consumers will accept lower content as apposed to a price increase , they only have 'X' number of Baht in their jeans pocket on a daily basis . That system has been in use for many years in the western world , I guess you can blame us for that also , but we cannot be blamed when local vendors Adjust ' their weigh scales to extract more for less , even the change of egg selling from numbers to weight was a means of extracting more cash for less .

The ways and means of business can be very dubious , check weights of content by different suppliers , it is printed on the packaging .

[marquess]

99% of goods moved around Thailand are moved around by trucks or ute's. I am sure that most of them run on Diesel and the price of this fuel has not gone up at all.

True it has not gone up and moreover there has been a 10% decrease in the price of oil over the last few days, but from what I have observed at the pumps there has only been 3% decrease in pump prices. I wonder if that is down to the fact that we are all (non diesel consuming drivers) subsidising Diesel users, any excuse to screw the consumer!

[barrybankruad]

99% of goods moved around Thailand are moved around by trucks or ute's. I am sure that most of them run on Diesel and the price of this fuel has not gone up at all.

Not yet. Wait until next month when the money for subsidising diesel runs out.

[OZEMADE]

99% of goods moved around Thailand are moved around by trucks or ute's. I am sure that most of them run on Diesel and the price of this fuel has not gone up at all.

True it has not gone up and moreover there has been a 10% decrease in the price of oil over the last few days, but from what I have observed at the pumps there has only been 3% decrease in pump prices. I wonder if that is down to the fact that we are all (non diesel consuming drivers) subsidising Diesel users, any excuse to screw the consumer!

Agree, it is a bit dear when I take the Yamaha T-MAX out, but it does twice the distance. However I find the ISUZU D-MAX Ute runs cheaply on Diesel. Sorry just being a smart arse.

[jimbeam1]

We just bought 4 eggs 30bt, a few months ago could buy ten for that.

jb1

[arthurwait]

99% of goods moved around Thailand are moved around by trucks or ute's. I am sure that most of them run on Diesel and the price of this fuel has not gone up at all.

Not with you know who's price fixing in place, they are only supporting PTT through this not anyone else. Diesel should now be around 33B and at times should have been 37B. The same thing is now happening with 91. Now expected to be sold at a loss.

Don't be surprised if you have a very long queue at PTT soon.

Edited May 9, 2011 by arthurwait

[arthurwait]

99% of goods moved around Thailand are moved around by trucks or ute's. I am sure that most of them run on Diesel and the price of this fuel has not gone up at all.

True it has not gone up and moreover there has been a 10% decrease in the price of oil over the last few days, but from what I have observed at the pumps there has only been 3% decrease in pump prices. I wonder if that is down to the fact that we are all (non diesel consuming drivers) subsidising Diesel users, any excuse to screw the consumer!

All the selling prices as said are fixed, if you go above PTTs price someone soon turn ups. They of course don't control the buying price. 91 is now at a loss. Diesel was earlier this month.

Yes the you are right, non diesel users are being used to susidise diesel users. It was worse before Song Kran. Guess who they didn't want protesting.

95 has the profit that all types should have, but don't. Users of this are being screwed the most.

[12DrinkMore]

The Asians must continue to allow their currencies to appreciate against the USD. Tim and Ben are, despite the lies that emanate through their lips, pursuing a weak dollar policy, as they reckon that this will re-balance the global economy and lead to a US recovery. This, in turn, is forcing up the commodity prices in terms of USD's. Let 'em have their inflation and let us keep things steady.

[MaiChai]

Thailand is at a disadvantage to some of its neighbours because it does have cheap oil and gas. Indonesia, Malaysia and Vietnam have oil; even Burma has more oil/gas. While the economy is still booming, how long can Thailand stay ahead of the competition, considering it has a 10/15 year lead in terms of infrastructructure and market development?

[rubl]

And now for the good news:

[bkk_mike]

I like how they say that mobile phone charges won't need to go up.

Ignore completely the fact that everywhere else in the world, they've come down, while Thailand's haven't.

I just came back from 4 weeks in the UK, and on a pay as you go SIM, had unlimited internet, 300 minutes of voice calls (to any network), and 3000 texts, all for the princely sum of £15 (740 baht). Does Thailand have an equivalent? (Admittedly, I pay less than that in Thailand, but that's because I don't use my mobile for internet here, apart from on the Wi-Fi at home / at the kid's school.)

[cutter007]

Prakit Chinamourphong, president of the Thai Hotels Association (THA),..............."Average room rates at luxury hotels in Hong Kong and Singapore have jumped to almost three times the price of those in Bangkok."

Really prices for hotel rooms on small islands with large populations are more expensive than hotel rooms in a large rural country.

Tell us something else really smart, like champagne is more expensive than water, and lead weighs more than powdered cocoa.

I love the lies in this country, the reason why they are raising prices is because the government is letting them, the government lifted the price restrictions on all goods I think last month.

This is to sandbag the election, the democrats know they can't win, so they are going to sabotage the economy, and then with the red shirts win,

they will blame it all on them. It's not really a sophisticated plan, but this is Thailand, and really you could fool most people with any silly plan as long as you don't spell every step of it out for them.

Also, to help out the consumer is a joke as well, when they talk about the delayed price increases, it takes time, sometimes a couple of months to raise consumer goods like food, you don't just tell Tesco "hey next week, I am going to raise your prices by 15%"

[cutter007]

Prakit Chinamourphong, president of the Thai Hotels Association (THA),..............."Average room rates at luxury hotels in Hong Kong and Singapore have jumped to almost three times the price of those in Bangkok."

Really prices for hotel rooms on small islands with large populations are more expensive than hotel rooms in a large rural country.

Tell us something else really smart, like champagne is more expensive than water, and lead weighs more than powdered cocoa.

I love the lies in this country, the reason why they are raising prices is because the government is letting them, the government lifted the price restrictions on all goods I think last month.

This is to sandbag the election, the democrats know they can't win, so they are going to sabotage the economy, and then with the red shirts win,

they will blame it all on them. It's not really a sophisticated plan, but this is Thailand, you could fool most people with any silly plan as long as you don't spell every step of it out for them.

Also, to help out the consumer is a joke as well, when they talk about the delayed price increases, it takes time, sometimes a couple of months to raise consumer goods like food, you don't just tell Tesco "hey next week, I am going to raise your prices by 15%"

[sirchai]

We just bought 4 eggs 30bt, a few months ago could buy ten for that.

jb1

So two eggs 15 baht and one 7 baht, 50 Satang? :jap:

[Thai at Heart]

One day, these companies will push the Thai people so far that they will simply give up eating domestic food and live on Big Macs which is about the most inflation proof product in the world.

Are the processors admitting that they add no value to the chain? Lets go all communist and suggest that all the refining and processing of food should be nationalised. I can almost hear the chairman of CP picking his dentures up off the floor just thinking of such a suggestion. The farmers get ripped off and the consumers are gouged. The investment these middle men put up is negligible and yet they reap monopoly/oligopoly profits year after year. Their business is completely risk free.

Please someone tell me what real benefit having a limited supply of middle men freely dictating market prices brings to the country?

[bulmercke]

We just bought 4 eggs 30bt, a few months ago could buy ten for that.

jb1

My local Carefour - Big C - has 30 - a tray - for 119 baht - grade 3. Just a few months ago 99 baht.

[rubl]

We just bought 4 eggs 30bt, a few months ago could buy ten for that. jb1

So two eggs 15 baht and one 7 baht, 50 Satang? :jap:

Walked past Si Yan market here in BKK a few days ago, still 10 for less than 40B.

[phiphidon]

We just bought 4 eggs 30bt, a few months ago could buy ten for that. jb1

So two eggs 15 baht and one 7 baht, 50 Satang? :jap:

Walked past Si Yan market here in BKK a few days ago, still 10 for less than 40B.

However the government has set the egg prices at around 3 baht. Somebody somewhere is not listening to the government - but just what is the legal precedent of a caretaker government with regard to the government set price of eggs - who is responsible, should the democrats be dissolved for dereliction of duty? Stranger things have happened...............

http://thaifinancial...ork-egg-prices/

[rubl]

We just bought 4 eggs 30bt, a few months ago could buy ten for that. jb1

So two eggs 15 baht and one 7 baht, 50 Satang? :jap:

Walked past Si Yan market here in BKK a few days ago, still 10 for less than 40B.

However the government has set the egg prices at around 3 baht. Somebody somewhere is not listening to the government - but just what is the legal precedent of a caretaker government with regard to the government set price of eggs - who is responsible, should the democrats be dissolved for dereliction of duty? Stranger things have happened...............

http://thaifinancial...ork-egg-prices/

Farmprice around 3 THB. I'm talking about market price of 3.60. 20% more, but no details on size. Still about half what another member seems to have paid. All this also ignoring global trends of course.

As for legal precedents, don't think jurisprudence works like that in the Thai legal system. By law as well

[daveyravey]

I like how they say that mobile phone charges won't need to go up.

Ignore completely the fact that everywhere else in the world, they've come down, while Thailand's haven't.

I just came back from 4 weeks in the UK, and on a pay as you go SIM, had unlimited internet, 300 minutes of voice calls (to any network), and 3000 texts, all for the princely sum of £15 (740 baht). Does Thailand have an equivalent? (Admittedly, I pay less than that in Thailand, but that's because I don't use my mobile for internet here, apart from on the Wi-Fi at home / at the kid's school.)

Well far cough to the UK if you dont like it here!

Edited May 18, 2011 by daveyravey

[homeslice]

Consumers must brace for more price hikes.

Farang must brace for more price gouging.