Gasoline prices drop 7 times, transportation fares and consumer goods prices remain unchanged

After the first week of gasoline price reduction, market prices did not decrease accordingly. This is in stark contrast to the situation where commodity prices often "follow the flow of rain", increasing every time gasoline prices increase.

On October 13, the Vietnam National Petroleum Group reduced gasoline prices by VND670/liter to VND22,890/liter, diesel prices by VND880/liter to VND20,240/liter, kerosene prices were rounded down to VND850/liter to VND20,500/liter... Thus, since the beginning of the year, this is the seventh time domestic gasoline prices have cooled down. Consumers still hope that the reduction in gasoline prices will reduce transportation costs and consumer prices. However, the reality is not like that.

Illustration photo: VNA

No discount on transportation

In transportation, fuel accounts for about 40-50% of the cost factor. The continuous decrease in fuel prices in recent months is expected to reduce transportation costs.

However, according to Mr. Bui Danh Lien, Chairman of the Hanoi Transport Association, this reduction in gasoline prices will not affect transportation fares. Because although gasoline prices have decreased, the price reduction margin in the last seven times is too low, not enough to compensate for previous price increases, one time only reduced by 30 VND/liter. If businesses want to change fares, they will spend a lot of time and money on procedures for registering fare adjustments, changing fare meters, gift boards, tickets, etc. Therefore, fares cannot be adjusted down immediately when gasoline prices decrease.

According to Mr. Lien, transportation businesses adjust fares when the total increase/decrease in gasoline prices exceeds 7-10%, then transportation units will consider adjusting fares. Although this is the seventh time gasoline prices have been reduced in the past two months, compared to the total price increases of the previous times, the total decrease in gasoline prices up to now is only about 700 VND/liter. Compared to the current gasoline price of 22,890 VND/liter, this difference only accounts for about 3%.

Furthermore, when gasoline prices increased sharply before, transport businesses also had to “struggle” to maintain fares to ensure competitiveness in the market. Meanwhile, other fare components such as bridges, roads, parking lots, insurance, periodic driver inspections; fees; salaries for staff, etc. are also weighing on businesses. Therefore, the reductions in gasoline prices over the past two months will help transport businesses reduce the burden of input costs.

Sharing the same view, according to Nguyen Van Thanh, Chairman of the Vietnam Automobile Transport Association, fuel costs are considered one of many important factors that make up transportation fares. Since the beginning of the year, gasoline prices have decreased many times, but the reduction range is only 1-3%, so it is very difficult to immediately adjust fares.

Furthermore, in reality, whenever transportation fares want to be reduced, there must be a certain delay, because the procedures and costs for adjusting the reduction are also complicated, and businesses also need time to monitor the fluctuations in gasoline prices, whether they will increase again or not. In calculating the increase/decrease in prices, taxi businesses will encounter more difficulties due to costs such as reprinting fares, adjusting meters, registering with authorities, etc. Therefore, there must be a long-term reduction margin for transportation businesses to be able to make adjustments.

Prices of food items remain the same as before the gas price reduction. Source: VNA

Consumption still holds price

Not only have transportation costs remained stable, but essential consumer goods have also not fluctuated when gasoline prices have decreased. A survey at Hom Market (Hanoi) on October 19 showed that vegetable prices remained the same as in previous weeks. Specifically, green mustard greens were priced at VND5,000/bunch, tomatoes at VND12,000/kg, squash at VND10,000/kg... In particular, water spinach increased by VND2,000/bunch, being sold at VND15,000/bunch; potatoes at VND15,000/kg, a slight increase of VND1,000...

Prices of meat and fish products are also kept the same as before the gasoline price reduction. Pork loin, pork rump and pork ribs cost from 95,000-110,000 VND/kg; Beef, fish and shrimp prices remain stable, such as beef at 240,000 VND/kg; carp at 70,000-80,000 VND/kg; tilapia at 55,000 VND/kg...

According to traders at Hom Market, the decrease in gasoline prices has no impact on the selling prices of consumer products. The price increase/decrease mainly depends on consumer demand and the supply of goods during the day.

Mr. Vu Vinh Phu, Chairman of the Hanoi Supermarket Association, said that in markets and supermarkets, most items are not discounted. Gasoline prices continue to decrease, but so far, it has not had much impact on the market, essential items still maintain their prices due to seasonality and consumer psychology.

This is a paradox because according to Mr. Phu, the price of food and vegetables depends on many factors such as supply, weather, season, etc., but the price of gasoline still affects about 10% of the cost. In order for people not to have to bear the current stagnant consumer prices, managers can come up with solutions to stabilize prices and implement social security in the coming time.

According to Vietnam+