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Furniture retailers dust off prices

Price increases of 10 percent to 20 percent on raw materials for furniture since the beginning of the year have prompted several retailers to hike prices by 5 percent to 10 percent this month, an industry insider said yesterday.

"In order to reflect the soaring cost, we have no choice but to increase retail prices by 5 percent to 10 percent in the first half of this year," said Jensen Chen (陳昌秀), chairman of the Taichung-based Formosa Furniture Design and Marketing Co (福曼莎傢俱).

According to Chen, prices of major raw materials, including imported wood, metals such as steel as well as petrochemicals such as paint, have increased by 10 percent to 20 percent since the beginning of the year.

Increased demand, especially from China, together with a global economic recovery starting from the end of last year, has also increased shipping costs, said Chen, who is also an official at the Taiwan Furniture Manufacturers' Association (傢俱公會).

The price of steel has risen by 20 percent from the beginning of this year. China Steel Corp (中鋼) announced last week it was charging an additional NT$1,900 to NT$3,200 a tonne for domestic steel starting April 1, citing higher global prices as well as rising raw material and transportation costs.

Soaring steel prices along with higher costs for other raw materials such as sand, stone and tiles, will also boost real-estate prices by 20 percent this year, Lai Cheng-i (賴正鎰), chairman of the Taiwan Construction Development Federation (台灣省建築開發公會) said in January.

In addition, Taiwan's top two oil suppliers, Chinese Petroleum Corp (CPC, 中油) and Formosa Petrochemical Corp (台塑石化), have increased oil prices three times from last December to this January.

The increased costs for raw materials has economists wondering whether the economy is facing price pressure.

"The price hike for raw materials in recent months has caused consumers to worry that retail prices may skyrocket in the next six months," said Chu Yun-peng (朱雲鵬), head of National Central University's research center for economic development.

The center released a consumer confidence index report over the weekend. In the report, the center said the score for commodity prices eased 1.4 points to 107.75 last month from 109.15 in January. The report, conducted from Feb. 16 to Feb. 19, also showed that some 39.3 percent of the 1,160 respondents said they were worried about price-hikes in the next six months.

Another economist, however, shrugged off fears over inflation, saying higher costs for raw materials would only result in commodity prices to rebound a little, rather than sparking inflation.

"Since domestic demand may still be weak this year, I don't think manufacturers would want to transfer too much of the cost burden to consumers," said Wu Chung-su (吳中書), a research fellow at Academia Sinica.

"After negative growth in the consumer price index for the past three consecutive years, I think a 1 percent to 2 percent rise in the index is healthy and helpful to the economy," Wu added.

The nation's consumer price index (CPI), which measures inflation, saw a positive growth of 0.01 percent in January after three years of deflation, according to statistics by the Directorate-General of Budget, Accounting & Statistics.

The wholesale price index rose 1.05 percent in January and 2.39 percent year-on-year, due to higher prices for raw materials.

The CPI statistics for last month are scheduled to be released on Friday.
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