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Businesses to make gradual, not shocking price increases
The petroleum price increase of 11-36% in late February led commodity prices to increase by 15-25% in March and April. However, with the latest 30% petrol price increase, businesses plan to make gradual, not shocking commodity price increases.
It is now impossible for enterprises to raise commodity prices by 15% as sharp price increases would not be accepted by customers.
Inflation has been hurting the sales of all enterprises and raising sales prices is risky, according to Nhu Manh Hai, General Director of Homivina, a producer and distributor of consumer products and kitchen equipment in Hanoi.
A representative of Anh Phu Paper company in Que Vo Industrial Zone in Bac Ninh province said that the company raised sale prices by 20% before the petrol price hike due to the higher cost of paper materials. Therefore, the company is going to raise prices by only a few percent more.
He said that the Vietnam Paper Corporation promised to maintain its current prices. Meanwhile, his company spent tens of billions of VND to purchase materials for storage; therefore, it is able to keep prices relatively stable until the end of the year.
According to Nguyen Hoang Ngan, Deputy General Director of Binh Minh Plastics Company, the latest petrol price increase has made transportation fees increase by 10%, or 1% of production cost. Binh Minh, which specialises in making PVC and PE pipes and accessories, said that if material prices do not fluctuate from now till the year’s end it will keep prices stable and accept lower profit.
Plastics companies are the ones suffering the most directly from the crude oil price increases. Most of them had to raise sale prices four times, by 30-50%, in the first half of the year. Therefore, the latest petrol price hike is not an ‘opportunity’ for them to raise sale prices.
APT, a seafood trading company, said that the company is now still producing with materials it bought several months ago, and that it will not use new materials for another one or two months. However, it is not sure if the company will raise sale prices at that time, because price increases need to be approved by the HCM City People’s Committee and accepted by customers.
In general, enterprises only reconsider sale prices of finished products three or four months after any input material price fluctuations.
The petrol price increase will surely have impacts on production and business, but this proves to be a small problem in enterprises’ operations as enterprises nowadays are much more worried about lack of capital and high bank loan interest rates.
VNN
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