09/10/2007 (The Nation Business) - Amid fears of an adverse impact from the floating of the cooking gas price later this year, the Commerce Ministry will call an urgent meting next week with 100 consumer-goods manufacturers to ask them to curb rising prices. The private sector has planned to ask the government's permission for price increases next month.
The Internal Trade Department will also ask manufacturers to delay their planned increase in prices to reduce negative impacts on consumers who are likely to suffer from a higher cost of living in the fourth quarter.
Department director-general Yangyong Phuangrach said yesterday that the ministry would try to ask the manufacturers to maintain current retail prices for as long as possible.
"The price freeze should absorb the burden on consumers which has already been pushed up slightly by higher fuel prices," he said, adding that manufacturers who increased their retail prices without the department's approval would be punished.
Yangyong said that officers would be dispatched soon to convince Thai President Foods, the manufacturer of Mama instant noodles, to delay a price hike. The company intends to raise the price in the fourth quarter or the first quarter of next year. Yangyong added that a rise in the price of instant noodles would have a psychological effect on other brands as Thai President Foods is the country's largest manufacturer of instant noodles.
The price of instant noodles is one of the country's major economic indicators. If the sales volume is increased, this implies that the economy is slowing down. Sales of Mama noodles rose 12 per cent in the first nine months of this year.
Mama enjoys a 52-per-cent share of a market segment valued at Bt10 billion.
However, during a meeting of the Joint Standing Committee on Commerce, Industry and Banking, leading private-sector figures agreed that they would propose that the Internal Trade Department allow them to increase product prices during the monthly meeting with Commerce Minister Krirk-krai Jirapaet on November 2.
The price rise was the major item for discussion during the meeting. The business sector believes it can no longer freeze current prices due to rising costs.
Federation of Thai Industries chairman Santi Vilassakdanont said production costs were rising more than 50 per cent in some product segments, especially those whose raw materials depend on energy.
Transportation firms should be first allowed to increase their fees because they have to shoulder increasing costs following the rise of oil prices in the global market, he said.
He said some consumer producers had to carry higher costs and were not allowed to increase their price for many years, including instant noodles whose raw materials come from palm oil and wheat flour with prices surging around 60 per cent. Mama has planned to raise its price by Bt1 a sachet to Bt6, citing higher production costs.
If the Internal Trade Department allows operators to increase their prices, Santi believes that consumers should not suffer a strong impact because competition is controlled by market mechanisms.
Thai Chamber of Commerce chairman Pramon Sutivong said the private sector has no plans to propose to the department that it revise its price-calculation structures. But the department should consider allowing some sectors to raise their prices.
Yangyong said he sympathised with the manufacturers but the price rise would hurt a large number of consumers.
"If a company insists on a price hike due to higher costs, consumers will need to shoulder the additional burden," he said.
Permission for price rises will be the main item of discussion during the meeting between the private sector and the commerce minister on November 2.
Yangyong said that although the exact number of products subject to price controls may be small, the ministry may consider expanding the list if necessary to curb rising prices.
The department has controlled the prices of essential goods for almost three years to protect consumers from high living costs.
At present, the department has 200 products and two services on its price-monitor lists and 35 products on its watch list that require monitoring each week.
Meanwhile, the department yesterday announced that it would fix the October steel reference price at September levels, due to sluggish demand in the domestic market.
The price of six-millimetre SR24 steel rods is Bt22,450 per tonne and the minimum price is Bt21,950 per tonne. The hot-rolled steel price is kept at Bt25Bt25.50 per kilo, while the hot sheet price is Bt26Bt27 per kilo.
The price for deformed bar 12 mm SD40 steel is Bt21,550 per tonne and for 16mm to 32 mm Bt21,250 per tonne.
Yangyong said his department was monitoring global prices and if they changed, a meeting would be held to refix domestic prices to ensure fairness for both producers and consumers.