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Demand increase a little, prices rise sharply
Since mid April, the prices of many commodities, from vegetables, fish, chicken to refrigerators and TV sets have been increasing. The price increases have been attributed to the effectiveness of the demand stimulus packages and the fear of the local currency’s devaluation.
Commodity prices moving up
Since April 20, the prices of fresh food at traditional markets have been increasing after a long time of staying put. Chicken, for example, has increased by two or three times compared to three months ago. For example, coloured-feather fowls, sold at VND24-25,000/kg previously, are now selling at VND42,000, while white fowls have surged from VND18,000 to VND27,000/kg.
Home appliance centres in HCM City have reported that many suppliers have raised the prices of import products, from refrigeration products to consumer electric products, by 3-5%.
Electrolux, JVC, Panasonic and Sanyo have announced price increases – only Sony has not yet.
Local newspaper Saigon tiep thi has reported that except several product items subject to promotion programmes for the May holiday, other products all have seen prices increase by 7-15% over the beginning of the year.
The products which have seen the biggest prices increases are ones which were imported in April.
The prices of electric cable have increased by 15%, while steel has increased by VND150,000/tonne. Dealers say that plastic products are going to increase by 3-5% in price.
Why?
According to the HCM City Statistics Office, the city’s CPI increased by 0.49% in April, while food prices increased by 0.51%.
Economists have pointed out that commodity prices have been increasing because of increased input material prices. For example, the price of soybeans has increased from VND330,000/kg to VND490,000/kg, which has led to feed price increases and meat price increases.
Explaining the higher chicken price, Nguyen Quoc Trung, General Director of Jappa Company, said that supply is short. As the chicken price decreased sharply in the first two months of the year, hurting farmers, they have given up farming fowls.
Moreover, bad weather has also affected productivity. Nguyen Hong Son, the owner of a fowl farm in Dong Nai province, said that hot weather has raised the death rate from 10% to 15% and sometimes 20%. Previously, a fowl could weigh 2.7kg after 40 days of breeding, while now it is only 2.3kg.
The material prices for plastic and steel products have also been on the increase, leading to price increases of finished products. For example, the material plastic price has increased by $5-10/tonne (PPC is now at $770-780/tonne), while ingot steel by $30-40/tonne to $410-420/tonne.
The VND/US$ exchange rate fluctuation has also been cited to explain the price increases. The dollar price on the black market has nearly reached VND18,500/US$1, forcing sellers to adjust sale prices.
Nevertheless, analysts don’t think that prices will keep rising. Trung from Jappa said that the fowl price will return to VND20,000/kg in May. The three key fowl suppliers in HCM City, CP (Thailand), Emivet (Malaysia) and Jappa (Indonesia) and imported chicken will be able to meet the city’s demand, estimated at 100-120,000 fowls per day.
VietNamNet, SGTT
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