Lower fuel costs have little effect on consumer goods

Economy January 09, 2015 01:00

By Petchanet Pratruangkrai


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The plunge in the cost of diesel fuel has had little downward impact on the retail prices of most goods, according to the Commerce Ministry's Internal Trade Department.

Boonyarit Kalayanamit, director-general of the department, said the prices of most consumer goods had not decreased in accordance with the reduction in domestic fuel prices, since most companies had switched to natural gas for vehicles (NGV) and only about 30 per cent of goods transport still relied on diesel.

The department found that for large products, the lower diesel price caused their retail prices to fall by only 0.7-0.8 per item, meaning that for a Bt100 product, the price might drop by just 70-80 satang. For small items, the lower cost of diesel might result in prices to fall by only 0.01 per cent.

Boonyarit said the department needed to study the cost structure of each product carefully, as fuel is not the only expense for manufacturers. Other costs such as warehousing, operating expenses, wages and raw materials had to be taken into account.

The department will ensure that manufacturers and consumers receive equal benefits, he said, but if it were found that lower fuel prices had cut a manufacturer’s costs significantly, it would be expected to reduce its retail prices accordingly.

However, the department may need to give manufacturers some time to do this as they are bound by transport contracts, normally for three to six months.

Manufacturers who do not reduce retail prices in accordance with real costs could face legal action under the Goods and Service Prices Act, and could face a Bt140,000 fine and/or seven years in jail.