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Published on October 18, 2007

The ministry is worried price pressure will send inflation soaring.

Thai Processed Foods Association president Vilai Kiatsrichart said most food companies agreed to freeze prices, in spite of increased production costs.

The association and the Federation of Thai Industries will meet members soon to explain the ministry's price policies, she said.

Pun Paniangvait, an executive at Thai President Foods - the maker of Mama brand instant noodles - said it would freeze prices for as long as possible. But, if input costs - such as flour - did not fall soon it would be forced to seek an increase next year.

"We haven't yet submitted a request for price increases," Pun said. "If we are to raise prices, it will be by 50 satang a pack, even though there could be a problem given the low circulation of satang coins. Consumers could be given candy for change."

Pun said all instant-noodle manufacturers suffered from elevated production costs and they would surely have to lift retail prices.

Ajinomoto Thailand, the maker of Yum-Yum, became the first manufacturer to seek permission to increase prices.

Sahaphattanaphibul managing director for sales, Prapot Nanthawatsiri, said it would seek an increase soon for its toothpaste and soap.

He said rising oil prices were a minor factor in hiked production costs. All raw-material prices have surged since 2005, he said.

If it is not permitted an increase the company could face difficulties.

The ministry yesterday asked 200 manufacturers to temporarily postpone price increases in a bid to keep annualised inflation at 2.5 per cent, and alleviate burdens on consumers suffering from high oil prices.

At a meeting yesterday the ministry introduced three conditions to ensure reasonable, fair and gradual price increases. Manufacturers must comply with conditions when seeking increases.

One condition is increases must be incremental and in satang, not by the full baht.

The ministry's Internal Trade Department director-general Yanyong Phuangrach said incremental increases would reduce the psychological impact on consumers.

The ministry will seek the Finance Ministry's help by increasing the volume of satang coins in circulation.

He said the ministry had no plans to approve any rises at this time.

"The ministry wants to ensure consumers are protected at this time of higher cost of living. Manufacturers should help by freezing retail prices for as long as possible," he said.

Yanyong said it was not an appropriate time to increase prices. Consumer purchasing power is low.

He said the food-and-beverage sector was a particular concern. So far, 517 items in 13 product categories, including instant noodles, canned fish, medicine, vegetable oils and detergents have sought increases.

Yanyong said companies should try to reduce costs such as marketing, rather than passing them on to consumers. The department said marketing made up between 10 per cent and 30 per cent of production costs.

Petchanet Pratruangkrai

 The Nation