For the sales promotion month, Co-op Mart, Maximart, Diamond and Parkson all announced they would reduce the selling prices of several products by 20-50%, and thus consumers feel that prices have begun falling. In fact, the price decreases are seen only on inventory items, which have low purchasing power, and luxury products.

Dang Thu Thuy, a consumer in District 3 in HCM City, said that suppliers had to reduce selling prices at this moment to get prepared for the sales in the high reason, at the end of year and the New Year 2008, even though the government had not lowered import taxes.

Meanwhile, the consumer goods that Mrs Thuy and other housewives expect to see price decreases on, food and foodstuffs, construction materials and others, have not seen decreases yet.

In fact, the sales promotion month can only help reduce prices in supermarts and central markets, while retail prices stay firm at high levels. As September is a vegetarian diet month for many households, the prices of seafood and meat in wholesale markets of Chanh Hung and Binh Dien in HCM City have decreased by VND1-2,000/kg. However, retail prices in retail markets in the city remain unchanged.

Ca loc, a kind of fresh water fish, is selling at over VND60,000/kg. Meanwhile, the prices of dairy products stay firm despite the lower import tax on milk powder. Only Vinamilk announced the slight reduction of VND200-300 per product on the occasion of the promotion month.

Explaining this, Deputy Director General of Vinamilk Tran Bao Minh said that the tax reduction could not offset the input material price increases. Due to the drought in the milk cow farming areas, the material supply proves to be very short and dairy producers do not have enough material for production. Mr Minh said that local sources could only satisfy 20% of the demand for milk materials.

Meanwhile, Le Phuong Thuy, Director of Phuong Thuy Company, the distributor of consumer goods, said that though petrol prices had decreased, transportation fees remained the same, and therefore, no price decrease would occur.

After reducing prices slightly as requested by the government, steel, cement and other construction material producers have raised selling prices again by 3-5%.

Worries still exist

When lowering import taxes, state management authorities said that price reductions would not be seen until 15 days after the decision went into effect. And now, one month after the tax reductions went into effect, it is clear that they have not helped much.

Dinh Nam Dinh, Deputy Chairman of the HCM City Cargo Transport Association, said that the reduction of VND500/litre of petrol was not enough to encourage enterprises to reduce transportation fees. Moreover, 80% of the trucks in HCM City are oil-run; therefore, the petrol price decrease has not affected transport companies.

Meanwhile, the director of a supermart said that suppliers had not said if they would maintain the prices applied in the sales promotion month or not, while the coming months would be the high season of the year.

Source: Tien phong.