The six major consumer-goods makers can’t freeze their prices… and will increase instead

Check mate for the Great Deflator, AKA the Commerce Minister.

As usual, he said to the press before that the target of this meeting was to reduce prices of some consumer products.

And as usual, the companies gave him a serious snub (read the result of the last meeting in february… it’s hilarious).

As the Bank of Thailand highlights the possibility that inflation could hit 10 per cent this year, the six major consumer-goods makers, who control 90 per cent of the market, told the Internal Trade Department yesterday they could not maintain their prices.

After their prices hit the ceiling, the manufacturers may also have to ask for the department’s approval for a further price hike to cover rising costs, said Prapot Nanthawatsiri, president of the Thai Soap, Detergent and Personnel Care Manufacturers’ Association.

“It is very difficult for us to freeze prices as requested. For now, all we can do is to increase prices within the ceiling, but soon we may have to ask for permission for a further price increase,” said Prapot.

Despite stating that Saha Group, where he is a senior executive, would be the last to increase retail prices despite losses, he said detergents would be the first items whose prices will be raised – as more than 40 per cent of the products contain petroleum by-products as a raw material. Soap and shampoo prices would be the next to be increased, as 30-40 per cent of their raw materials are affected by the soaring price of oil.

Internal Trade Department deputy director-general Vatcharee Vimooktayon is hopeful the producers will not raise their prices sharply, in fear of a smaller market share at a time of lower purchasing power.

“The government should seek new measures to bring down the burden on consumers,” Prapot said, suggesting that the government focus on food prices and fares. (Nation)

The inflation tsunami is on the move.

Inflation of costs, of commodities prices, have pressurized businesses’s margins since too long… The spillovers effects have started too (wages for instance…)… those secondary effects will fuel further inflation… the dams of capped prices are going to break… leading to hikes for many products in the same time… creating new shock, etc.

It’s Economy 101. It’s better to let prices increase a little bit, slowly, instead to cap prices and wait for the dams to break (shock effect)…

Anyway, it was so obvious since… many months… But no, of course not, the authorities, experts and politicians have continued to play with their stupid and childish ideas.

Prices controls policies just can’t work in our current environment.

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Thailand Crisis

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But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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