DTI expects prices of basic goods to plunge by March

CEBU, Philippines - The Department of Trade and Industry (DTI-7) expects a downward movement of basic and prime commodities specifically construction materials by the end of this month or by the first week of March.

DTI-7 regional director Asteria Caberte said in an interview yesterday that the continuous oil price slump in the world market will bring about cheaper prices of some basic commodities, especially those that have huge fuel component such as construction materials.

Based on the latest price monitoring result, there is no adjustment yet of the commodities' price index within the region, Caberte said explaining that since the drop of oil price started only in January this year, retailers on the other hand, had been doing their inventory stocking ahead and the stocks could usually last for at least three months.

However, drastic and more profound price dive in bread products have been observed immediately following the commitment of the Philippine Bakers Association to affect price cut of some basic bread products, as a result of cheaper fuel.

The fluctuation of the household basic needs' prices on the other hand will not be as significant, as the prices of these goods have already been controlled by the fierce competition in the market.

This means, that the current suggested retail prices adopted by the retail leaders in the region is one of the lowest, as competition continues to dictates price movements given the increased purchasing power of consumers especially in urban areas like Cebu.

Prices of construction materials like G.I. sheets, cement, steel bars, among others are expected to drop, Caberte said as these products have huge fuel cost components.

Other basic  and prime (household) commodities identified by DTI include among others, coffee, milk, canned goods, detergent bars, cooking oil, egg, sugar, whole chicken, rice, flour, toilet soaps.

From the peak of US$107.73 per barrel in June last year, the price of crude oil fell 50.6 percent to US$53.27 per barrel by end of 2014.

According to the National Economic and Development Authority, the decline in global oil prices has led to reductions in domestic unleaded gasoline (-19 percent), diesel (-26 percent), kerosene (-23 percent), and liquefied petroleum gas (-32 percent) . Along with an already low inflation rate of 4.1 percent in 2014, lower oil prices will boost purchasing power among consumers and support corporate revenue growth.

Caberte said her office will intensify the price monitoring activity toward the end of February and first few days of March to see if the prices of these products have been influenced by the cheaper fuel. (FREEMAN)