Consumers should expect the price of goods and services to increase in the country in the months ahead, something which the Independent Consumer and Competitions Commission (ICCC) says it does not have a direct control over and that the people should brace for it.
ICCC Commissioner and Chief Executive Officer (CEO) Mr. Paulus Ain, said the increases are due to factors like the weak exchange rate of the Kina, the increase of global food prices due to the covid-19 pandemic, and the increase of international and domestic fuel prices.
In terms of the value of the Kina, Mr. Ain said Papua New Guinea (PNG) is heavily dependent on the importation of goods.
Therefore, whenever there is a depreciation of the kina it tends to drive up the cost of goods imported in the country.
“Over the past 12months the PNG kina to US dollar was generally stable; however, it has been trading at around K1 to $0.28, which is very weak. A stronger kina makes its cheaper to import goods into the country and subsequently result in lower prices being passed on to consumers,” he said.
He said the Food and Agriculture Organization also reported that global food prices have been rising in 2021 due to the coronavirus pandemic, which has caused supply chain disruption and rising shipping costs in food exporting nations.
“So, in addition to the weak exchange rate, we have been importing goods into the country that have risen in prices in their countries of origin,” added the Commissioner.
In addition to the higher prices of imported goods, domestic fuel prices have also increased significantly over the past 12 months in PNG and globally.
The fuel price increase is mainly driven by the increase in world market price for crude oil and PNG’s weak exchange rate.
“Crude Oil is an international traded commodity; hence, its pricing is usually driven by the world market prices and is often traded in US dollars. The increase in crude oil prices since last year is mostly due to the demand greater than the supply, due to the re-opening of economies around the world and geopolitical issues in the middle east, which often affects the stability of the supply of oil in the world market.”
“Domestic fuel prices are a significant driver of the cost of goods and services in PNG because it is an important input in the production and delivery of good and services in the country,” said Mr. Ain.
He further added that all these factors are contributing to the rising cost of goods and services in the country and therefore businesses must put up prices in order to cover these rising costs.
The ICCC is doing all it can to protect consumers through the monitoring of prices and the monthly inspection of pump prices to ensure that service stations are charging the correct retail fuel prices.
“Consumers must note that there are also other costs that are incurred in the production and provision of goods and services in the country and ICCC has no control over these other costs that are recovered at the retail end through higher prices of goods and services.
Therefore, ICCC does not have any direct control over the prices of all goods and services in the country.”