Brace for steep price hikes, consumers warned
by Lyf Compton
The COVID-19 pandemic is driving up the cost of manufacturing and shipping, and consumers should brace themselves for increased prices.
“This is critical going forward. When everything is rising for consumers how are they going to afford it,” is the question being posed by local businessman Leonet Anderson, owner of General Hardware Supplies in Arnos Vale.
Anderson told SEARCHLIGHT on Thursday that since the COVID-19 pandemic hit last year, there has been what he considers a “tremendous” increase in prices of many goods on the world market, but he can speak specifically about prices related to hardware products like lumber, steel, plywood and light hardware.
Apart from that, shipping prices have also been going up.
“My suppliers say that in the past, a 40-foot container out of China was bought for below US$3000 now they are being quoted at over US$9000 so freight alone is triple and almost everything comes out of China,” Anderson said.
“Steel has gone up more than 50 per cent on the world market. I read a report yesterday about the impact on lumber, they have never seen these prices,” Anderson noted.
He said that apart from shipping, COVID-19 is causing some manufacturers to operate with less than half of their staff because so many people are getting sick.
“It means if anybody gets COVID, the business has to shut down for sanitizing and testing and other issues and that means a slow-down in production, so a lot of time is lost. That means there are buyers waiting for goods that can’t be produced in time, so the supply and demand comes into play, which means the cost of these things go up,” Anderson explained while noting that the issues also affect raw materials that are used to produce the goods.
He said that currently, his stock is being sold at the usual price but it is hard to predict what will happen with new shipments, but prices will most likely go up.
“To say the least between 30 to 50 per cent…also, when you look at vehicles, high value items, something that cost $30,000 can go up to $45,000.
“And besides the prices going up, the supply is also short because less is being produced,” the businessman lamented.
He added that items that would normally ship in one or two months are being delayed for three and four months.
“A container out of Brazil or Turkey…they are telling you they can’t ship until April or May because there is so much demand on shipping lines. Old orders are backed up and in some cases production time has been doubled and then you have to wait on the shipping line then after that, delays in transhipment.
“I am not over exaggerating. Look for prices to increase. Food prices increase. But thing is, a rise in prices means more revenue for government through duty and VAT,” Anderson said.
He added that the government’s decision to raise the customs service charge by 1% will have a significant impact on imports.
“Government getting more revenue, but how do you see the consumer surviving? You have to raise salaries and wages.
“Business people are going to get more profits so wages can’t remain stagnant or people are going to suffer like crazy,” Anderson commented.
Another local businessman, Lance Oliver of Rent and Drive Ltd has also seen rise in prices. Oliver deals in auto parts.
“There has been increase in prices because manufacturers are claiming that raw material like steel went up by 30 per cent so there is definitely an increased coming from overseas,” Oliver said on Thursday.
He noted that price increases overseas mean more duty when the item arrives here and that will definitely have a serious impact on consumers.
“Even on motor oil prices. Some suppliers have sent notices about price increase and noted that they can’t absorb it anymore so they have to pass it on.
“In some cases between 5 to 20 per cent increase,” Oliver said.
He added that his business and a few others will try to see how much of the price they can absorb but it is impossible to absorb the entire raise.
An article published in Forbes magazine in July 2020 says the global manufacturing and supply chain ecosystem have been among the hardest hit by the down-level impacts of the pandemic.
“For the first time in modern manufacturing history, the critical variables of demand, supply and workforce are all impacted globally at the same time,” Forbes said.