What are the factors that can lead to an increase in the prices of goods and merchandise in local markets

Arab Weather - At a time when all global economic indicators point to a rise in prices in the coming period, Jordanians are wondering about the impact of this in causing a wave of rise in the prices of goods and merchandise in local markets, and about the factors that could lead to that.

High freight charges

In a previous statement, Deputy Chairman of the Amman Chamber of Commerce, Nabil Al-Khatib, spoke about a rise in international shipping fees, which reached unprecedented numbers since the beginning of this year due to the shortage of containers, expecting that its impact on goods imported to the local market will deepen soon.

According to Al-Khatib, the shipping wages for one container (40 feet) from China to the port of Aqaba increased from $2,000 six months ago to about $10,000, an increase of $8,000 in addition to the resulting increase in customs duties on goods.

Oil price hike

The continuous rise in oil prices may be another reason to affect prices, as oil prices rose to unprecedented numbers since May 2019, and continued to rise to (72.9 dollars per barrel) in Friday’s trading, especially after the release of the Organization of Petroleum Exporting Countries report ( OPEC) reported a report in which it said that the recovery of the global economy was delayed due to the resurgence of high cases of Corona virus and renewed closures in major economies such as the euro area, Japan and India. It is expected that the demand for oil will increase in the second half of this year. The current price hike is caused by the shortage of oil stocks, which are gradually decreasing due to the rise in economic activity.

The price has increased 39% since the beginning of the year thanks to high demand and supply cuts by "OPEC" and its allies within the framework of "OPEC +". OPEC expects the global economy to grow by 5.5% in 2021, unchanged from the previous month, assuming that the impact of the pandemic is largely contained by the beginning of the second half of 2021.

Other factors

In addition to the foregoing reasons, the rise in the costs of raw materials for most commodities in most countries of the world contributes to the rise in the prices of goods in the local markets, and there are local causes that lead to higher prices related to some procedures, fees and taxes imposed on imports.

With the continued rise in freight and raw materials costs globally, it could affect the extension of goods and merchandise to the Kingdom, because importers and traders may refrain from importing, with the exception of foodstuffs and basic foodstuffs.

Government measures to counter possible price hikes

The Jordanian government is seeking to develop plans that guarantee limiting any price hikes, and dealing with any global and local variables such as taxes and others.

The Ministry of Industry, Trade and Supply said in a statement that the Council of Ministers took a number of measures last week to avoid a rise in the prices of basic commodities, including approving the adoption of ceilings for sea freight costs for the purposes of calculating taxes and customs duties until the end of 2021 to ensure that this measure is reflected on the final price of the consumer.

The measures include strengthening market control to enable the Ministry of Industry, Trade and Supply to take the necessary measures to set price ceilings on basic supply commodities when needed.

The ministry indicated that it would intervene in the event of exploiting the changes that occur in global markets to raise prices locally in violation of the legislation in force.