Inflation shrinks sales for consumer good producers

By Thi Ha   February 27, 2023 | 12:59 am PT
Ho Chi Minh City’s sellers of fresh food and groceries, as well as consumer goods producers, are reporting shrunken sales amid high inflation.

Hoa, the owner of a pork stall at Xom Moi Market in Go Vap District, said sales in the first half of this month decreased by 30% compared to before Tet, the Lunar New Year holidays in late January, and by 50% against the pre-Covid period.

"I used to sell one pig a day. Now half of the pig is the maximum," she said.

Similarly, Oanh, a small seafood trader at Pham Van Hai Market in Tan Binh District, is no longer serving her big customers from restaurants, while her regular individual customers buy seafood only once or twice a month.

Hoa’s pork stall at Xom Moi Market in Go Vap District, Ho Chi Minh City. Photo by VnExpress/Thi Ha

Hoa’s pork stall at Xom Moi Market in Go Vap District, Ho Chi Minh City. Photo by VnExpress/Thi Ha

Many large seafood chains are also struggling with sluggish business. According to Thanh Tung, the owner of a seafood shop on Highway 13 in Binh Thanh District, his shop’s sales this month are down 30% from the same period last year.

"Now customers choose popular seafood suitable for daily meals instead of expensive one like before," he said.

Royal Seafood chain CEO Tran Van Truong said the amount of seafood his firm has sold in the first two months of this year decreased by 10% over the same period last year.

The price of many seafood products is declining, but sales have not shown any sign of going up, he said.

Grocery stores and restaurants are also on tenterhooks as their sales are only enough to cover costs like rent, and some are even operating at a loss.

After ten years of running a grocery store on Le Duc Tho Street in Go Vap District, Lan said she used to sell VND2-4 million (US$84.7-169.4) worth of goods every day, but in January her sales fell to VND200,000-500,000 a day, the lowest in a decade.

"Recently many of my regular customers no longer buy snacks and soft drinks, but only essential goods. If the situation does not improve in the next few months, I will stop doing business and return to my hometown," she said.

Consumer goods companies are in the same situation. Truong Chi Thien, general director of Vinh Thanh Dat Food Corporation, told VnExpress that his firm’s egg sales in the first months of this year were the lowest in four years.

Phan Van Dung, deputy general director of leading food producer Vissan, said its sales in the first two months rose by 20% year-on-year, thanks to much higher demand for food during Tet.

But since the holiday, Vissan has had to continuously reduce prices to stimulate consumer demand.

A local woman buys vegetables at a market in Phuoc Long B Ward, Thu Duc City, Ho Chi Minh City. Photo by VnExpress/Quynh Tran

A local woman buys vegetables at a market in Phuoc Long B Ward, Thu Duc City, Ho Chi Minh City. Photo by VnExpress/Quynh Tran

Businesses said they are under pressure from surging raw material prices over the last two years, while the consumer price index (CPI) in January increased by 4.89% over the same period last year.

"If high inflation persists, sooner or the later prices of many products and the cost of dining out will all go up," grocery store owner Lan said.

High prices, together with economic fluctuations such as rising unemployment and interest rates, have affected many people’ ability to pay for goods.

Oanh in District 5 said her husband’s construction company had difficulties last year, so there was no bonus for Tet, and the company even still owes back-pay for employees’ salaries.

Her family’s spending dropped significantly in the first months of this year. "Instead of spending VND5-6 million per month on family meals, now I reduce it to VND3.5 million," she said.

A report by the General Statistics Office shows that the total retail sales of consumer goods and services last month increased by 15.8% over the same period last year, thanks to Tet, but the total was still 11.9% lower than the pre-Covid period.

Experts predicted that in the first half of this year, the domestic economy will still face many obstacles, and sales won’t recover until the middle of the year.

The conflict between Russia and Ukraine continues to be complicated, and China’s economic recovery could fuel energy demand, according to global economic analysts.

For these reasons, inflationary pressure is still very high in Vietnam and commodity prices may increase further, experts said.

According to Mirae Asset Securities Company, the unemployment rate is likely to increase again due to the need to cut personnel to save operating costs and the fact that an increasing number of businesses are shutting down.

SSI Securities Corporation said consumption may slow down under the impact of inflation.

In addition to reducing prices to spur demand, the Government should have specific policies to support industries, not only in the food sector but also in wood, fisheries, construction, and garment and textiles, according to the Ho Chi Minh City Food Association.

When these industries receive policy support and preferential loans, they will have more cash flows to create jobs for workers, and consumption will rebound, according to the association.

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