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> Price hikes in coming months.., Stagflation risk

mych
post Sep 6 2015, 06:41 PM, updated 2 months ago

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.. taking account of the recent GST of 6% + 30% reduction of exchange rate against USD.. outlook is pretty grim.. price increases is now a fact once existing inventory is depleted...

.. basic items like grains, sugar will increase... as it generally imported..
MR.Jellyfish
post Sep 6 2015, 08:25 PM

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QUOTE(mych @ Sep 6 2015, 06:41 PM)
.. taking account of the recent GST of 6% + 30% reduction of exchange rate against USD.. outlook is pretty grim.. price increases is now a fact once existing inventory is depleted...

.. basic items like grains, sugar will increase... as it generally imported..
*
controlled items wont increase in prices without legislative approval
nexona88
post Sep 6 2015, 08:58 PM

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some of the products selling price already increase nod.gif
AVFAN
post Sep 7 2015, 12:27 AM

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QUOTE(mych @ Sep 6 2015, 06:41 PM)
.. basic items like grains, sugar will increase... as it generally imported..
*
those controlled items will be among the last to go up.



first should be imported or imported content fmcg - fruit juices, toiletries, baby foods... beef, lamb...

then apparel, electronic gadgets, books, building materials.... cars, houses...

everything will go up, a matter of how much and how fast.

only one thing that may go down next month - petrol as crude price stays low.

http://english.astroawani.com/business-new...e-ringgit-72195
http://www.nst.com.my/news/2015/09/weaker-...ase-house-price
jaycee1
post Sep 7 2015, 03:02 PM

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QUOTE(mych @ Sep 6 2015, 06:41 PM)
.. taking account of the recent GST of 6% + 30% reduction of exchange rate against USD.. outlook is pretty grim.. price increases is now a fact once existing inventory is depleted...

.. basic items like grains, sugar will increase... as it generally imported..
*
Its even worst when you do the equation the other way.

30% USD and 6% GST on top of the exchange hike.




Retailers may try to absorb some, but 30%? Its either close shop or consumers pay for a lot more.

Those that have been cutting prices and having firesales during the slowdown last year would be hard pressed to re-stock.




AVFAN
post Sep 8 2015, 05:05 PM

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this is only 2q2015. july and aug probably worse.

imagine situation when retailers are forced to raise prices further in the coming months as rm continues to decline.

QUOTE
Malaysian 2Q retail sales fall more than expected on GST, ringgit

By Chong Jin Hun / theedgemarkets.com   | September 3, 2015 : 11:02 AM MYT  

KUALA LUMPUR (Sept 3): Malaysian retail sales fell 11.9% in the second quarter (2Q), from a year earlier, as the combined impact of the goods and services tax (GST) and weaker ringgit hit sentiment, Retail Group Malaysia (RGM) said.

In a statement today, RGM said it downgraded its 2015 full-year retail sales growth forecast to 3.1%, from 4% previously, following the 2Q data.

"This latest quarterly result was the worst quarterly retail growth rate since the Asian financial and economic crisis in 1998. The negative impact of GST on Malaysia's retail industry is worse than anticipated.

"The weak ringgit is affecting costs of goods, due to higher import costs. Higher import costs are affecting all retail sectors, from grocery stores, restaurants, fashion stores, furniture stores, electrical & electronics stores, etc. Higher retail prices will be more apparent by the fourth quarter of this year. By then, Malaysian consumers' purchasing power will decline further," RGM said.


Today, the ringgit weakened to 4.2335 against the US dollar, following China's yuan devaluation and in anticipation of US interest rate hikes this year. The ringgit also closely tracks prices of crude oil, which forms a crucial portion of the Malaysian economy.

RGM obtained its industry data from Malaysia Retailers Association (MRA) members who have been contending with the GST since its implementation in April this year.

Today, RGM said the 11.9% drop in 2Q retail sales as compared with MRA's, estimated a 3% contraction forecast.

"This quarterly performance is highly disappointing and way below the average growth rate of -3.0% forecasted by members of MRA in June 2015. All retail sub-sectors suffered declines in their retail businesses during the second quarter of 2015, due to the implementation of GST," RGM said.
http://www.theedgemarkets.com/en/article/m...ted-gst-ringgit


This post has been edited by AVFAN: Sep 8 2015, 05:31 PM
MR.Jellyfish
post Sep 8 2015, 09:01 PM

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QUOTE(jaycee1 @ Sep 7 2015, 03:02 PM)
Its even worst when you do the equation the other way.

30% USD and 6% GST on top of the exchange  hike.
Retailers may try to absorb some, but 30%? Its either close shop or consumers pay for a lot more.

Those that have been cutting prices and having firesales during the slowdown last year would be hard pressed to re-stock.
*
some of china imports have over 1000% margin so absorbing the 30% increase is negligible.
jaycee1
post Sep 10 2015, 02:40 PM

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QUOTE(MR.Jellyfish @ Sep 8 2015, 09:01 PM)
some of china imports have over 1000% margin so absorbing the 30% increase is negligible.
*
Typical narrow minded view. Typical of BNTroopers.

At least credit to you, you put in your KEYWORD, "SOME". As in a small portion if any.



You think ALL our imports come from China ah?


I import directly from China also. What is the 1000% margin you speak of? Trying to pull wool over the sheep again?


China imports mostly FOB (unless directly negotiated). You no need pay for insurance/Freight which is in USD?

Then the additional costs from currency exchange are all compounded by GST, which is based on CIF prices in local currency after conversion.



Our factory equipment are all in USD and EURO. Including contract maintenance, parts and support.


Funny, you talk like you know. If you are directly affected, you will know what sort of impact this is.


Other things you probably didn't think about;

1) Duties and taxes (other than GST)
2) Cash flow
3) Financing costs increase
4) GST refund (or lack thereoff)
5) Production wastages

All these affect cost beyond just material costs....and to make it worst, these are compounded costs. You increase base cost, everything goes up more than the initial costs.




I know some of my clients and associates have seen revenue drop by 40-50% due to reduced demand. Couple with a 40% cost hike, many will find it difficult to survive. And pray tell what happens to the staff if the company decides to shutter up?

This post has been edited by jaycee1: Sep 10 2015, 02:43 PM
MR.Jellyfish
post Sep 10 2015, 03:39 PM

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QUOTE(jaycee1 @ Sep 10 2015, 02:40 PM)
Typical narrow minded view. Typical of BNTroopers.

At least credit to you, you put in your KEYWORD, "SOME". As in a small portion if any.
You think ALL our imports come from China ah?
I import directly from China also. What is the 1000% margin you speak of? Trying to pull wool over the sheep again?
China imports mostly FOB (unless directly negotiated). You no need pay for insurance/Freight which is in USD?

Then the additional costs from currency exchange are all compounded by GST, which is based on CIF prices in local currency after conversion.
Our factory equipment are all in USD and EURO. Including contract maintenance, parts and support.
Funny, you talk like you know. If you are directly affected, you will know what sort of impact this is.
Other things you probably didn't think about;

1) Duties and taxes (other than GST)
2) Cash flow
3) Financing costs increase
4) GST refund (or lack thereoff)
5) Production wastages

All these affect cost beyond just material costs....and to make it worst, these are compounded costs. You increase base cost, everything goes up more than the initial costs.
I know some of my clients and associates have seen revenue drop by 40-50% due to reduced demand. Couple with a 40% cost hike, many will find it difficult to survive. And pray tell what happens to the staff if the company decides to shutter up?
*
1) so far everything I've imported is either duty free or less than 10% duty
2) yup cash flow i get what you mean, my cashflow is tight too sweat.gif
3) I borrow in myr so my financing is not affected by usd change
4) I'm a petty trader who dont make 500k/year so no gst here. And I get supplies from abroad(china) which isnt bought locally so I dont pay gst neither
5) this is a pretty big issue and I find that non moving stock is actually a big problem for me too sweat.gif
AVFAN
post Sep 10 2015, 03:50 PM

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QUOTE(jaycee1 @ Sep 10 2015, 02:40 PM)
China imports mostly FOB (unless directly negotiated). You no need pay for insurance/Freight which is in USD?

I know some of my clients and associates have seen revenue drop by 40-50% due to reduced demand. Couple with a 40% cost hike, many will find it difficult to survive. And pray tell what happens to the staff if the company decides to shutter up?
*
my old employer, a trading co. imported mostly china products in usd, little value adding locally.

the gross margin was about 40%.

if the rm has lost 35%, this biz will practically have zero profit unless...

... find cheaper alternative source (which is not possible as product is a distributor product, proprietory)
... negotiate for a lower supply price (which will be difficult as they source mainly from europe and usa; rmb also gained 30% vs rm)
... raise local selling prices (probably will, but will lose market share in a slow market)
... cut costs - reduce headcount, reduce staff benefits (this is probably the approach)

so, i understand what some sme's will be facing. it can get ugly very soon, many will lose jobs or get a pay cut.

a very weak rm, rising prices, high debt levels will hurt a lot of biz very quickly which in turn will hurt a lot of people.

just tragic our gomen and their troopers seem to be take it so lightly.
jonathan1986
post Sep 11 2015, 02:19 AM

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QUOTE(jaycee1 @ Sep 10 2015, 02:40 PM)
Typical narrow minded view. Typical of BNTroopers.

At least credit to you, you put in your KEYWORD, "SOME". As in a small portion if any.
You think ALL our imports come from China ah?
I import directly from China also. What is the 1000% margin you speak of? Trying to pull wool over the sheep again?
China imports mostly FOB (unless directly negotiated). You no need pay for insurance/Freight which is in USD?

Then the additional costs from currency exchange are all compounded by GST, which is based on CIF prices in local currency after conversion.
Our factory equipment are all in USD and EURO. Including contract maintenance, parts and support.
Funny, you talk like you know. If you are directly affected, you will know what sort of impact this is.
Other things you probably didn't think about;

1) Duties and taxes (other than GST)
2) Cash flow
3) Financing costs increase
4) GST refund (or lack thereoff)
5) Production wastages

All these affect cost beyond just material costs....and to make it worst, these are compounded costs. You increase base cost, everything goes up more than the initial costs.
I know some of my clients and associates have seen revenue drop by 40-50% due to reduced demand. Couple with a 40% cost hike, many will find it difficult to survive. And pray tell what happens to the staff if the company decides to shutter up?
*
This ^ Well put points.
forever1979
post Sep 11 2015, 05:41 AM

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najis wont not take it serious for inflation as his main concern is how to spin the IMDB issue and continue to stay in power.

his stupid minister is even ridiculous, just pressure the trader to reduce the price, no tolerance.

The key problem here is the government should catch the big fish. Deal with the monopoly, take out the middlemen....

by aiming those small trader like kopitiam, do u think is fair ? is opening kopitiam so profitable, why we seem many f&b biz close down after 1-2 years ?


zeb kew
post Sep 12 2015, 07:46 AM

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QUOTE(MR.Jellyfish @ Sep 8 2015, 09:01 PM)
some of china imports have over 1000% margin so absorbing the 30% increase is negligible.
*
You're doing your math wrong.

Sell a widget for RM100 and earn RM1000?

The word you're actually looking for is "markup" rather than "margin". They're not the same thing.
MR.Jellyfish
post Sep 12 2015, 10:43 AM

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QUOTE(zeb kew @ Sep 12 2015, 07:46 AM)
You're doing your math wrong.

Sell a widget for RM100 and earn RM1000?

The word you're actually looking for is "markup" rather than "margin". They're not the same thing.
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its english wrong not math wrong sweat.gif
lunatique
post Sep 12 2015, 11:51 AM

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QUOTE(MR.Jellyfish @ Sep 8 2015, 09:01 PM)
some of china imports have over 1000% margin so absorbing the 30% increase is negligible.
*
1000% margin? doh.gif doh.gif
Come on la. with rising inflation rates in china, even many stuff are almost the same cost if converted in RM (that is before July)
1000% margin only highlights ignorance of many consumers in the market today. shakehead.gif
MR.Jellyfish
post Sep 12 2015, 01:33 PM

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QUOTE(lunatique @ Sep 12 2015, 11:51 AM)
1000% margin?  doh.gif  doh.gif
Come on la. with rising inflation rates in china, even many stuff are almost the same cost if converted in RM (that is before July)
1000% margin only highlights ignorance of many consumers in the market today.  shakehead.gif
*
willing buyer willing seller, because everyone sells at RM x, why should i sell it below RM (x-20%)

This post has been edited by MR.Jellyfish: Sep 12 2015, 01:37 PM
lunatique
post Sep 12 2015, 01:39 PM

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QUOTE(MR.Jellyfish @ Sep 12 2015, 01:33 PM)
willing buyer willing seller, because everyone sells at RM x, why should i sell it below RM (x-10%)
*
so much negativity with current consumer sentiments, i dont think the term "willing buyer" comes into play nowadays. sweat.gif
Even the term "discount" is severely misunderstood. The very principle of discounts, for sellers to attract more sales or reward customers, has been misunderstood as a way to haggle prices to be reduced to match their budget, not the market value of the item. hmm.gif hmm.gif
And the poor purchasing power today is not helping. doh.gif

This post has been edited by lunatique: Sep 12 2015, 01:42 PM
MR.Jellyfish
post Sep 12 2015, 02:07 PM

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QUOTE(lunatique @ Sep 12 2015, 01:39 PM)
so much negativity with current consumer sentiments, i dont think the term "willing buyer" comes into play nowadays.  sweat.gif
Even the term "discount" is severely misunderstood. The very principle of discounts, for sellers to attract more sales or reward customers, has been misunderstood as a way to haggle prices to be reduced to match their budget, not the market value of the item.  hmm.gif  hmm.gif
And the poor purchasing power today is not helping. doh.gif
*
actually the poor purchasing power actually helps a lot because made in usa are sold at 3x the price of made in taiwan, right now the asian importers are glorifying
lunatique
post Sep 12 2015, 02:51 PM

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QUOTE(MR.Jellyfish @ Sep 12 2015, 02:07 PM)
actually the poor purchasing power actually helps a lot because made in usa are sold at 3x the price of made in taiwan, right now the asian importers are glorifying
*
dont think it'll matter much. nowadays people still buy anything thats made in china, made in vietnam, made in india, etc.
Only thing now matters to all of us is that prices of goods are rising 30%-40%. moneyflies.gif moneyflies.gif
Thats all that matters.
ILoveLalat.net
post Sep 12 2015, 02:59 PM

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QUOTE(lunatique @ Sep 12 2015, 02:51 PM)
dont think it'll matter much. nowadays people still buy anything thats made in china, made in vietnam, made in india, etc.
Only thing now matters to all of us is that prices of goods are rising 30%-40%. moneyflies.gif  moneyflies.gif
Thats all that matters.
*
Prices are all going up presently due to the increase in currency exchange rate. As far as the increase in prices are concerned, everybody is still buying. Purchasing power is still there.
Then why do you think everybody is still at Starbucks? People queuing up to buy the latest gadget, trending fashion to satisfy their lust? Life goes on as usual. The only thing that might affect them is if their workforce is on the line...

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