The prices of many consumer goods, especially food and foodstuffs, have skyrocketed in the first quarter of this year driven by higher input costs and record gasoline prices. At her local retail store last weekend, Loan, a worker in a garment factory in HCMC’s District 12, could not hide her surprise at the sudden increase in the prices of many goods.
“I estimated the prices of many consumer goods like sugar, milk, cooking oil, instant noodles, fish sauce, and beer had increased by 10-30 percent since the beginning of this year,” she said.
She now has to pay VND500,000 ($22) to buy seasoning for half a month compared to VND400,000 earlier.
“Other living expenses have also gone up.”
The value-added tax was cut to 8 percent from 10 percent on Feb. 1, but many consumers said they “have yet to feel its impact” since the prices of many goods have risen sharply. Many retailers are also surprised by the price hikes. Ngoc, owner of a retail stall in HCMC’s Go Vap District, said the prices of beer, sugar, instant noodles, fish sauce, and cooking oil have increased by 10 percent this year.
“Consumer goods prices rarely increase in the first quarter. After Lunar New Year (Tet) holidays in early February, businesses often reduce prices to stimulate demand since demand is weak”.
Ngoc has yet to restock her stall, but the wholesaler who supplies her has announced a hike in prices during the next delivery because many manufacturers have already increased them. A survey found that the prices of eight of the nine main consumer products have surged, with seven of them seeing a double-digit increase. Saying input costs have increased by 120 percent in the last 12 months, a spokesperson for a cooking oil company added they had to raise prices by VND1,000-2,000.
Breweries also cited costs as a reason to hike prices. Wheat prices have risen by 10-20 percent since the crisis between Russia and Ukraine, two of the world’s biggest wheat exporters, began. The chief of a HCMC-based consumer goods producer said labor and raw materials costs have soared by 40 percent since last year and they have been forced to adjust prices up.
Acecook, the country’s leading instant noodles producer, said it has had to hike prices by 10 percent since input and transportation costs have risen. Other businesses said they have yet to raise their prices but it is “inevitable”. Truong Chi Thien, head of egg producer Vfood, said his company is losing VND100-200 on every egg it sells.
It has yet to increase prices because of a commitment under HCMC’s price stabilization program to keep prices unchanged for a month before and after Tet, which this year fell on Feb. 1. Thien said his firm would have to seek approval from the city Department of Finance to hike prices in the next stabilization program starting April.
The prices of other items like wood and steel also rose to new highs recently. Steel prices have gone up by nearly 8 percent in the last two weeks to over VND19 million per ton, which is higher than the VND18.3 million reached last year. Vietcombank Securities forecast its prices to keep rising as energy prices surge amid the Ukraine conflict.
VnDirect Securities said global commodities prices are at a 14-year peak. The S&P GSCI Index, the benchmark for commodity prices, has gone up by 5.02 percent this month, it said. Rising oil prices have driven metal prices up, with aluminum rising by 3.6 percent to a new peak of US$3,850 per ton on the London Metal Exchange, it said. Iron ore futures are 15 percent up, the highest in over three months, it added. It said commodities prices will continue to increase, putting inflation risks on the global and Vietnam market.
