PSC urges businesses to stock up to stabilise prices

Jul 03, 2010 News

The Private Sector Commission (PSC) is urging all businesses to contribute to domestic price stability by ensuring that they maintain adequate stocks and supplies of merchandise throughout the year.
This call is being made in recognition of the fact that suppliers contribute to inflationary pressures by increasing prices when goods are in short supply, PSC said in a release yesterday.
“While the Commission acknowledges that this situation occasionally results from circumstances beyond suppliers’ control, it is nevertheless incumbent upon suppliers to gauge potential risks in their supply chain and order their supplies in advance accordingly.”
According to the Commission, while increasing prices is the typical response to conditions of short supply, this has serious deleterious effects on the economy at the broader level and ultimately on businesses themselves.
“In the first instance, although the initial price increase may be temporary, this occasionally introduces uncertainty about the general level of prices, and may very likely result in some permanent inflation because, as a result of uncertainty, other suppliers also increase the prices of unrelated goods. This translates into excessive levels of inflation for no other reason than that of suppliers underestimating demand for their goods.”
Consequently, PSC said, businesses are faced with higher than normal wage increases than would have prevailed under balanced supply/demand conditions.
“For businesses, the increased wage bill they face in the New Year may also very likely wipe out the short-term profits that resulted from the price increases earlier on. Conditions of increasing prices also usually require more effort at budget time.”

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