Ministry studying cost structure of goods after reduction in diesel prices
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WITH OIL prices falling in the world market, and the domestic price of diesel having been cut, the Commerce Ministry is reviewing the cost structure of goods. It expects the prices of some products - and construction materials, in particular - to be lowe
Commerce Minister General Chatchai Sarikalya yesterday said the Internal Trade Department was conducting a cost-structure study, as some goods prices could be decreased in light of lower diesel prices.
However, he said he believed that amid intense domestic competition, many enterprises would in any case reduce their retail prices during the New Year festive period as a strategy to stimulate sales.
“Some prices could be lowered. The market mechanism and high competition will encourage manufacturers to lower their prices soon,” the minister said.
Boonyarit Kalayanamit, director-general of the Internal Trade Department, said that although the price of diesel had been lowered by Bt3 per litre, the overall price of goods had not yet decreased as production costs were mainly dependent on electricity rather than oil costs.
However, about 1 per cent of goods in the market – mainly products such as cement and steel, construction materials whose cost relies heavily on logistics – could be reduced soon, he said.
If most enterprises found their production costs were lower, they would decrease their retail prices by themselves amid a tough competitive environment, he added.
Meanwhile, the Commerce Ministry has won the agreement of manufacturers and leading modern traders to give discounts of up to 70 per cent on a wide range of products in the final week of the year.
The project will be held at around 12,800 modern-trade outlets nationwide from December 24-30.
Leading enterprises taking part in the project include CP Group, Thai Beverage, Saha Group, Central Group, Tang Hua Seng, Max Value, 7-Eleven, Family Mart, Tesco Lotus, Big C, The Mall and Tops Supermarket.
Chatchai expects that the event will generate Bt50 billion in spending, while consumers could lower their shopping bill by Bt15 billion.
Somchai Pornrattanacharoen, president of the Thai Wholesalers and Retailers Association, said that with lower diesel prices, businesses would not increase their goods |prices next quarter, despite many companies planning to raise them over the course of 2015.
Consumer spending power will recover gradually next year, as the economy has not yet expanded significantly because of still-low crop prices, he said.
Somkiat Makcayathorn, managing director of Patum Rice Mill & Granary, producer of the Mah Boon Krong Rice brand, said many traders under the Thai Rice Packers Association had collaborated to provide discounts for consumers.
For Mah Boon Krong, the price of a 5-kilogram pack of jasmine rice will fall from Bt180-Bt200 to |Bt150.
Participating enterprises have allocated about 15,000 rice packs per company during the discount period.
Suwit Kingkaew, vice president of CP All, said businesses wanted to return some benefit to consumers, so they have joined the government’s populist project.
However, he expressed concern about people stocking up on lower-priced goods and called on consumers to purchase only for short-term usage during the project.
Salinla Seehaphan, corporate affairs director of Tesco Lotus, said the company would provide discounts of 10-70 per cent at its more than 1,800 branches.
Gift baskets are still popular among people shopping for New Year presents, she added.
