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25 Jan 2022

Econ Digest

Which measure best meet the needs of consumers in an era of high prices?

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        The spread of the Omicron variant strain tends to affect the recovery of the business sector and the purchasing power of households, in contrast to the rising cost of living for meat, eggs, vegetable oil, energy and utility bills such as electricity prices. KResearch survey results show that Bangkok residents with a monthly income of less than THB15,000 are the group most affected by rising prices compared to other groups. About 36% of respondents said living expenses have increased by 20% compared to late 2021 before the prices of goods and services went up. As a result, Bangkokians have adjusted their spending behavior by making only necessary purchases, reducing or delaying the consumption of luxury goods like fashion products, reducing social events and buying cheaper substitute products. Looking ahead, the majority of Bangkok residents do not expect the rising cost of living to be solved in the short term, with more than 50% of the respondents expecting such problem to last for more than a year.
Regarding Bangkok residents’ expectations of the government measures to help solve the rising cost of living, the survey found that the top three measures that most consumers want the government to urgently introduce are to expand the scope of price controls on daily necessities (such as other fresh food, daily necessities and energy prices), to raise the minimum wage and to extend electricity and water subsidies that end in September 2021. For the private sector, consumers want operators to hold off on price hikes, reduce the packaging capacity of their products instead of raising prices, and increase the frequency of promotions on a variety of goods, especially daily necessities such as ready-to-eat food and personal products.

        KResearch believes that aside from strictly implementing various animal disease prevention and control measures and accelerating solutions to the continuing rise in raw material prices and transportation costs, both the government and private sectors should accelerate and work together to address supply shortages and build the competitiveness of small business entrepreneurs in the market. At the same time, businesses will need to be more flexible to adapt and improve costs management efficiency to help consumers and create future growth opportunities. For example, operators may choose to resize or reduce the volume of their products instead of raising prices, introduce technology to improve their inventory management, or use big data to analyze consumer behavior, so businesses can more accurately adjust and meet demand.

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Econ Digest