Dairy firms push up prices while they can

Dairy consumers have been angered as some producers jump to increase their prices before a new pricing law takes effect next month.

Under Circular No 122 that applies from October 1, dairy firms must register the price of milk for infants under six with the Ministry of Finance's Price Management Department or the provincial departments of finance. The agreed price would be calculated from the cost of materials and production.

Since the end of last month, some milk brands have increased prices by as much as 10 percent to get in before the new law that aims to stabilise the price of dehydrated children's milk and prevent unreasonable price hikes, Lao Dong (Labour) reports.

For instance, Abbot has adjusted prices on three of its products by 7 percent.

Anmum brand put its price up by 10 percent a few days ago. The price of Abbot's Ensure Gold for adults has jumped by 8 percent to VND470,000 (US$24.7) each 900g tin.

Milk shops on Nguyen Thong Street , district 3, said within a week Abbot's Pediasure brand would also have a price adjustment.

Nguyen Thi Hanh, general director of Sai Gon Co.op, said among the dozens of imported powered milk brands, only Mead Johnson had made a commitment not to boost prices.

For domestic dairy firms, only Hancofood has confirmed not to alter its price tag.

The dairy firms blamed the price increases on high production costs brought on by higher material costs and the changed USD/VND exchange rate.

Experts said, however, that dairy firms spent too much on advertising and sales commissions and passed the added cost to the consumers.

A woman shopping for milk, Thuy Oanh, on Nguyen Du street, Go Vap District was concerned that the circular only applied to powdered milk for six-year-olds so she expected price increases for milk for pregnant women and the elderly.

Apart from the regulations, the Consumer Right Protection Association needs to coordinate with retailers and boycott milk brands that always increase their prices

 

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Dairy firms push up prices while they can

Dairy consumers have been angered as some producers jump to increase
their prices before a new pricing law takes effect next month.

Under Circular No 122 that applies from October 1, dairy firms must
register the price of milk for infants under six with the Ministry of
Finance's Price Management Department or the provincial departments of
finance. The agreed price would be calculated from the cost of materials
and production.

Since the end of last month, some
milk brands have increased prices by as much as 10 percent to get in
before the new law that aims to stabilise the price of dehydrated
children's milk and prevent unreasonable price hikes, Lao Dong (Labour)
reports.

For instance, Abbot has adjusted prices on three of its products by 7 percent.

Anmum brand put its price up by 10 percent a few days ago. The price
of Abbot's Ensure Gold for adults has jumped by 8 percent to 470,000 VND
(24.7 USD) each 900g tin.

Milk shops on Nguyen
Thong Street , district 3, said within a week Abbot's Pediasure brand
would also have a price adjustment.

Nguyen Thi Hanh,
general director of Sai Gon Co.op, said among the dozens of imported
powered milk brands, only Mead Johnson had made a commitment not to
boost prices.

For domestic dairy firms, only Hancofood has confirmed not to alter its price tag.

The dairy firms blamed the price increases on high production costs
brought on by higher material costs and the changed USD/VND exchange
rate.

Experts said, however, that dairy firms spent
too much on advertising and sales commissions and passed the added cost
to the consumers.

A woman shopping for milk, Thuy
Oanh, on Nguyen Du street , Go Vap District was concerned that the
circular only applied to powdered milk for six-year-olds so she expected
price increases for milk for pregnant women and the elderly.

Apart from the regulations, the Consumer Right Protection Association
needs to coordinate with retailers and boycott milk brands that always
increase their prices./.

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Weaker dong enhances inflation threat: experts

Relatively low incremental increases in prices over the last few months have lulled consumers and others into a sense of false security, experts say, warning that inflation continues to be a serious threat in the coming months.

The recent devaluation of the dong against the dollar only enhances the threat, they add.

Production enterprises dependent on imported materials have to bear higher input costs and are likely to increase prices.

The State Bank of Vietnam on August 18 set the daily reference rate of the dong two percent lower at 18,932 to a dollar, the third devaluation since last November, in a move aimed at reducing the trade deficit.

The dong was little changed at 19,485 per dollar as of 9:10 a.m. Thursday in Hanoi, compared with 19,490 a week ago, according to data compiled by Bloomberg.

Dao Duy Kha, deputy general director of the Vietnam Plastics Corporation, said up to 90 percent of materials for the country’s plastic production was imported, thus the lower value of the dong was a big blow.

The gasoline price hike early this month had already pushed up their production costs and the higher dollar prices now make an increase in selling prices “unavoidable,” he said.

Some association members have already increased their prices, while others will do so soon, with an average increase at 1-2 percent, he added.

Kha said firms have not increased their prices sharply because current purchasing power in the market was still low. “However, the prices will continue to rise in coming months when the demand for products goes up.”

Tran Trung Hieu, general director of Hanoi Investment and Footwear Export-Import Company, which imports materials for footwear production and sells them to local producers, said he will increase prices to match the dollar hike.

However, he cannot raise prices under contracts signed months ago that are due to be delivered now. “We are suffering losses from the contracts,” he said. His company imports materials worth US$100,000-200,000 each month.

Meanwhile, the price hike has also affected a number of customers. “Some customers have cancelled their orders, while others have cut their buying volumes,” Hieu said. His company has had to lower its profits significantly to keep their traditional customers, he added.

The increase in costs of imported materials has also prompted many supermarkets to announce plans to increase their retail prices.

Nguyen Thanh Huyen, public relations manager for the Big C supermarket chain, said some distributors have proposed to raise their products’ prices by 5 to 10 percent.

Another supermarket chain, Maximark, has received proposals from over 100 distributors on increasing, by 3 to 10 percent, prices of 500 kinds of products, mainly food, cosmetics and home appliances.

The price increases have sparked inflation fears.

Vietnam’s consumer price index rose 8.18 percent in August from a year earlier, and 0.23 percent from a month earlier, the General Statistics Office said. In July, the index rose 8.19 percent from a year earlier.

“A very important implication is that the outlook for inflation is likely to be affected by the devaluation. The devaluation, of course, is going to raise the risk of imported inflation in the months ahead,” Bloomberg quoted Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore, as saying.

The dong will trade near 19,500 per dollar for “at least the next several weeks,” he said.

If inflation accelerates or the trade deficit deteriorates, “you may see more selling pressure on the dong. But, of course, that’s very much down to the upcoming data that we expect to see at the end of the month,” he said.

Vu Dinh Anh, deputy head of the Institute of Market and Price Research, said: “Inflation control should be the most important target for the end of this year. There is now a subjective complacence as consumer prices have only seen small hikes in recent months.”

The government aims to cap inflation at 8 percent this year, though many local analysts say that will be difficult to achieve.

Firms should carefully watch for changes in the exchange rate. They should prepare sources of the greenback to repay dollar loans on schedule, and use other foreign currencies, which have lower exchange rates, Anh said.

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Weaker dong enhances inflation threat: experts

Relatively low incremental increases in prices over the last few months have lulled consumers and others into a sense of false security, experts say, warning that inflation continues to be a serious threat in the coming months.

The recent devaluation of the dong against the dollar only enhances the threat, they add.

Production enterprises dependent on imported materials have to bear higher input costs and are likely to increase prices.

The State Bank of Vietnam on August 18 set the daily reference rate of the dong two percent lower at 18,932 to a dollar, the third devaluation since last November, in a move aimed at reducing the trade deficit.

The dong was little changed at 19,485 per dollar as of 9:10 a.m. Thursday in Hanoi, compared with 19,490 a week ago, according to data compiled by Bloomberg.

Dao Duy Kha, deputy general director of the Vietnam Plastics Corporation, said up to 90 percent of materials for the country’s plastic production was imported, thus the lower value of the dong was a big blow.

The gasoline price hike early this month had already pushed up their production costs and the higher dollar prices now make an increase in selling prices “unavoidable,” he said.

Some association members have already increased their prices, while others will do so soon, with an average increase at 1-2 percent, he added.

Kha said firms have not increased their prices sharply because current purchasing power in the market was still low. “However, the prices will continue to rise in coming months when the demand for products goes up.”

Tran Trung Hieu, general director of Hanoi Investment and Footwear Export-Import Company, which imports materials for footwear production and sells them to local producers, said he will increase prices to match the dollar hike.

However, he cannot raise prices under contracts signed months ago that are due to be delivered now. “We are suffering losses from the contracts,” he said. His company imports materials worth US$100,000-200,000 each month.

Meanwhile, the price hike has also affected a number of customers. “Some customers have cancelled their orders, while others have cut their buying volumes,” Hieu said. His company has had to lower its profits significantly to keep their traditional customers, he added.

The increase in costs of imported materials has also prompted many supermarkets to announce plans to increase their retail prices.

Nguyen Thanh Huyen, public relations manager for the Big C supermarket chain, said some distributors have proposed to raise their products’ prices by 5 to 10 percent.

Another supermarket chain, Maximark, has received proposals from over 100 distributors on increasing, by 3 to 10 percent, prices of 500 kinds of products, mainly food, cosmetics and home appliances.

The price increases have sparked inflation fears.

Vietnam’s consumer price index rose 8.18 percent in August from a year earlier, and 0.23 percent from a month earlier, the General Statistics Office said. In July, the index rose 8.19 percent from a year earlier.

“A very important implication is that the outlook for inflation is likely to be affected by the devaluation. The devaluation, of course, is going to raise the risk of imported inflation in the months ahead,” Bloomberg quoted Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore, as saying.

The dong will trade near 19,500 per dollar for “at least the next several weeks,” he said.

If inflation accelerates or the trade deficit deteriorates, “you may see more selling pressure on the dong. But, of course, that’s very much down to the upcoming data that we expect to see at the end of the month,” he said.

Vu Dinh Anh, deputy head of the Institute of Market and Price Research, said: “Inflation control should be the most important target for the end of this year. There is now a subjective complacence as consumer prices have only seen small hikes in recent months.”

The government aims to cap inflation at 8 percent this year, though many local analysts say that will be difficult to achieve.

Firms should carefully watch for changes in the exchange rate. They should prepare sources of the greenback to repay dollar loans on schedule, and use other foreign currencies, which have lower exchange rates, Anh said.

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• Greenback firmer on signs of rising demand
• Assoc insists on power price hike despite protests
• Market moves up sharply
• Naval forces boost global co-operation