Consumer goods likely to drop by March – DTI

CEBU, Philippines – Consumers may have to expect lower prices of basic goods late next month or early March amid the drastic drop in global oil prices. While the recent oil price rollbacks have already triggered a decrease in jeepney fares, the public will also likely see a reduction in prices of consumer goods.

The Department of Trade and Industry has urged manufacturers to slash prices of their goods as cost of Brent crude oil in the world market has dipped further below $50 to a six-year low.

DTI-7 Director Asteria Caberte explained lower prices of goods may not directly take effect because producers normally have a three-month inventory of their products.

“We really expect the decrease in prices may be in March,” Caberte said in an interview Tuesday. “Atong inventory level man gud is usually three months.”

She noted cheap oil likely affected the production in late December and early January.

“With the trend now of decreasing petroleum [prices], dako ni ug impact sa production volume plus the competition,” she said.

As to how much costs of products and services should be cut, the trade official said it depends whether fuel is big a cost component in their production.

Businesses that use fuel as big component in their operations should consider bringing down costs of their products or services, the DTI said. Service-related and transport-related businesses should also reduce costs.

Basic goods

Consumers will see a reduction in prices of basic goods such as sardines, milk, noodles, bread and coffee, she said.

Costs of construction materials including cement and steel bars will also move down. But prices of these items will not extremely drop because the demand for construction in calamity-hit areas is currently high, she also said.

The government can only urge – but not force – manufacturers to cut prices.

However, Caberte pointed out local producers generally do voluntary price reduction because of the growing competition driven by the presence of foreign products in the market.

“If they think they can lower, they will, because of competition,” she added.

“There’s a chance to compete, be cost-efficient. Make this decrease in fuel prices a chance for you to efficiently compete in the market,” she told producers particularly the price leaders in the market.

She explained prices of product distributors and wholesalers are normally lower than the suggested retail prices to allow retailers do markup pricing, and therefore comply with the SRP.

Meanwhile, 60-day price freeze has currently been implemented in Cebu province after it was declared under state of calamity last month due to typhoon Ruby. This means goods are sold at their prevailing prices and are placed under automatic price control.