Higher fuel price impact on consumer goods seen muted
THE Department of Trade and Industry (DTI) said the higher excise taxes for various fuels will have only a muted impact on consumer goods prices, raising the possibility manufacturer and retailers will absorb much of the costs rather than passing them on fully to the consumer.
Trade Secretary Ramon M. Lopez said producers and sellers of goods may elect to absorb the costs rather than risk exceeding the suggested retail price (SRP) for certain key commodities, which they are required to observe by law.
“I’m sure that manufacturers won’t increase their prices. Therefore, the groceries shouldn’t increase their prices since it’s in the law that they have to price their products within the SRP,” he added in a news conference.
“[ Their pricing] can be lower [ than the SRP] but it cannot be higher. That’s what we also have to check — if they are still pricing within the SRPs.”
In a presentation, the DTI estimated the cost impact on key goods such as canned sardines, noodles and breakfast foods such as coffee and pandesal at between P0.04 and P0.14 while additional costs for producers of items like meat loaf, corned beef and cement will be between P0.04 and P1.57. Food prices are politically sensitive because they form a key component of consumer price index (CPI) baskets in poorer countries, since low-wage families must devote a larger part of their income to food. According to the Philippine Statistics Authority’s CPI primer, published on its Web site, food and nonalcoholic beverages have a 38.98% weighting on the nationwide CPI basket.
Various government agencies have been talking down the impact of price increases in the run-up to the implementation of new taxes tis month. On Wednesday, the DTI said there will be a lag in the rise of soft drink and fuel prices as sellers run down their inventories of goods taxed at the old rates.
Mr. Lopez said the department estimates Jan. 15 to be the point where it can adjust the SRP to reflect the new excise tax on sugarsweetened beverages. However, if the old inventory still lasts in stores after Jan. 15, DTI may move the adjustment to Jan. 22.
Mr. Lopez said the department has received only one report as of Thursday of unauthorized price increases, which happened in the Visayas, adding that no drastic action to deter profiteers is currently needed.