DTI: Lower prices of goods, services seen in 2015

MANILA — Department of Trade and Industry (DTI) Secretary Gregory L. Domingo is expecting the prices of goods and services to go down this year, pushed by lower fuel retail costs and change of commodity’s prices on some products.

Domingo told reporters that consumers should benefit from the significant decline in prices of oil products which has direct effect to some sectors, particularly in logistics.

He cited three components of declining goods and services prices:

* The effect of fuel on the delivery of manufacturers’ products to their customers;

* Direct effect of electricity and fuel costs on the products outside of the delivery cost; and,

* The effect of fuel and electricity on the raw material prices which include the delivery of raw material to the manjfacturers and the indirect cost of fuel and electricity cost on the production of raw material, noting that the third component has longest lag effect on retail price reduction.

DTI Undersecretary for Consumer Protection Group (CPG) Victorio Mario A. Dimagiba, on the other hand, has noted that the lower oil prices reflect a 3.

0 percent decline on distribution cost of a suggested retail price (SRP) or 0.08 percent to 12 percent reduction of the published SRPs.

Based on DTI’s price monitoring for the last quarter of 2014, most of the monitored retail prices of basic and prime commodities are mostly unchanged or lower by 0.06 percent to 23.53 percent than the published SRPs.

Oil prices in the world market have gone down from USD110 per barrel to USD50, Domingo said.

“There should be reduction on SRPs on some products to reflect the lower cost of fuels and change of commodity’s prices on certain products,” the DTI chief noted.

“This should reflect to lower prices of goods and services this year,” he added.

“Most of our industries work under competition but there are some which have no competitive landscape. Those uncompetitive sectors, they are those who do not pass on the benefits. But to the extent that the industries are competitive, they really pass on, because they are pushed by the competition.

Someone will always offer a better price if they’re able to lower their cost so the others will be forced to follow soon,” he explained. “It’s the industries or the sectors that are monopolistic or oligopolistic that sometimes are not passing on the benefits.”

He added that the lower prices of goods and services this year will also reflect to lower inflation rate and will contribute to a better gross domestic product (GDP) growth this year.

Domingo, in a previous interview, projected that GDP growth for this year will reach 7.0 percent and above with the growing industrial and services sectors, public and private sectors’ infrastructure projects, and various events happening in 2015 in the Philippines such as election campaign, Papal visit, Asia-Pacific Economic Cooperation (APEC) Summit hosting, among others.