Retailers say they are already feeling the pinch
Kabeer Yousuf –
Dec. 30: With measures of controlling spending, scrapping bonuses and job-cuts in place, fears of a doomsday has already gripped the consumers’ mind and that is reflected in their response to the budget 2016.
While the majority has already curtailed their spending and took a roundabout to buy what is needed than to satisfy their desires as way of keeping some money with them, the rate of disposable income tend to reduce and as a result, Oman’s retail sector says they have already been affected.
Mubeen Khan, Finance Expert at the Capital Market Authority says that the retails sector has already started to feel the pinch of less spending and with the budget, prices of essentials would go up resulting in marginal losses.
“Consumer spending on luxury non-essential, non-food items have already seen a steep decline as the consumers are either avoiding or postponing their spendings on non-essential items”, Khan said.
The proposed austerity measures by the government including a freeze on bonuses in government owned companies and ministries would affect retail sector and disposal income would reduce, experts in the retail market opined. “Retail sector was heading a hike but if the recession continues the hike would only be a scanty figure for the first months of the bad time.
But as the spell passes without any changes in the currency value of oil for more than two years, it would create chaos in the retail sector”, Rijulal Rafeeq, Senior Product Manager, Al Khalili Group said.
“I don’t expect much of a negative impact on prices of retail goods, unless there is an increase in taxes, which is very unlikely”, a business think tank explained, adding that “ if petrol subsidies are lifted partially or fully, then there could be a ripple effect on commodities, but by a small margin”.Substantiating what he said, Mubeen Khan said that increased fuel prices would increase distribution cost as the Omani population is widely scattered in small patches and remote villages and the extra burden would easily be shifted to them.
“If the companies pass on increased cost, we may see a marginal increase in commodity prices.
Dollar is gaining strength due to the Rate hike of Federal Reserve, which will bring down Import cost of essential items as OMR is pegged to dollar.
This should offset increased distribution cost”.
“Any measures over an economy totally depends upon the oil, to patch up the shortfalls would extend its impacts on all the walks of life.
Direct taxes if any, would take its toll on the individuals.
People would be more concerned about the money they are spending over the commodities”, another top-notch corporate said.