Pain in shopping aisles

“Since early October, we have received over 100 proposals from our suppliers asking us to increase our products’ selling prices by 5-10 per cent”

Prices of many consumer goods are expected to continue to spike through to the year’s end.

Hanoi-based French-backed BigC supermarket said there might be a 5 per cent price hike in many products during the year’s two remaining months.

This is due to the US dollar-Vietnamese dong exchange rate, which is strongly fluctuating. The dong has depreciated 7.4 per cent on the back market so far this year. Early last week, the US dollar’s value surged to a new record high of around VND21,200 per dollar.

“For example, confectionery and wine prices will strongly increase, due to high demands before Tet [in early February, 2011] and the further expected devaluation of the dong,” said the supermarket’s vice general director, Nguyen Thai Dung.

State-run Tu Liem Import-Export Joint Stock Company, which manages two supermarkets in Hanoi, said that there would be strong price hikes for many products, particularly daily use products such as food, foodstuffs and consumer goods.

“It is difficult to accurately forecast the percentage of the hikes, due to the strong exchange rate fluctuations and the public’s increasing demands. But, I personally think that food and foodstuff prices may increase by 10 per cent,” said the company’s vice general director Nguyen Van Hai.

Hai said that many products’ prices were subject to exchange rate fluctuations, such as gas, steel, medicines and milk, and they had already risen in the early days of this month. For example, the price of gas increased by nearly VND30,000 ($1.53) per vessel.

Citimart vice director Ngo Van Hai said exchange rate fluctuations would push up the prices of many products until the year’s end.

“Since early October, we have received over 100 proposals from our suppliers asking us to increase our products’ selling prices by 5-10 per cent. The exchange rate fluctuations have pushed input material prices up,” he said.

According to Vietnam Steel Association (VSA), Vietnam’s steel price hikes until the year’s end might not stop, due to the same reason. Early this month, steel prices en masse rised by VND200,000-300,000 per tonne.

“But the strong exchange rate fluctuations have already increased the cost of steel manufacturing at an additional VND500,000-600,000 ($25.6-$30.7) per tonne against early October, because most steel billets are imported,” said VSA vice chairman Nguyen Tien Nghi.

Locally-owned Viet Long Joint Stock Company, engaged in electronics items, said exchange rate fluctuations had already augmented prices for Panasonic and LG items by 2-3 per cent over the past few months.

“If the exchange rate continues to rise, prices of the items will continue augmenting,” said a company representative.

Vietnam Cement Industry Corporation (Vicem) in mid October raised its prices by an additional VND30,000-50,000 per tonne of cement for the same reason as companies were forced to use much more dong to buy US dollars for importing input materials.

Hoang Mai Cement Joint Stock Company, an affiliate of Vicem, raised its price by VND50,000 per tonne in mid October. An executive said cement prices might continue rising due to increasing demands for construction materials and expected exchange rate hikes.

The consumer price index (CPI) in October rose 1.05 per cent against September, or 7.58 per cent compared with December 2009.

It is the second straight month the CPI increased above 1 per cent month-on-month. In September, CPI rose 1.31 per cent against August, the highest increase since February.

The Ministry of Finance’s Institute for Price and Market Research’s vice head Vu Dinh Anh said if the CPI increased by 2 per cent during the remainder of the year like it did by the end of 2009, inflation would be 9-9.5 per cent for 2010. If it rose by 3 per cent like it did in 2007’s two remaining months, it would be in double digits for 2010.

The government last week said that efforts must be made to keep the CPI under double digits for 2010. – VIR

Tags: Vietnam prices