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20 May 2022

Econ Digest

In an era where businesses have to weather the high cost of living


        Steady increases have been seen in domestic oil prices, especially diesel fuel that has climbed over THB30 per liter since May 2022 after the government gradually cut oil subsidies. If global oil prices remain high, business costs will inevitably rise. The cost of living will increase and consumer purchasing power will be affected as a result of the gradual increases in the prices of various product categories ahead. In a situation where expenses have increased while income remains static, consumers may become more cautious in their spending or frugal than before. This will inevitably affect business sales. However, three types of businesses may continue to enjoy moderate sales growth: 1) consumer goods that are daily necessities such as foods, personal and healthcare products and services, although consumers pay more attention to prices and the value for money; 2) energy-saving products such as appliances, electric cars and solar panels; 3) second-hand goods such as clothes, bags, mobile phones, IT devices, cars and homes.

        Another factor that may help such businesses maintain their sales is the reduction of their margins, or else they may have to make some sacrifices in terms of losses to maintain their businesses. However, this approach may pose a greater risk to such businesses. Meanwhile, the performance of each business in terms of sales volume may depend on other factors such as sales channels, location, target customers in the area and competition in the market. Looking ahead, close attention must be paid to several challenges, including recovery in the Thai economy/business sector as it rests with the development of COVID-19, the Russia-Ukraine crisis, sanctions on Russia, other business costs that are set to increase further, and consumer behavior as it will change rapidly and become more complicated.

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Econ Digest