Price has risen 15% in the past year.Prices of Gardenia High Fiber White Bread (400g)
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COMMODITY PRICES have crashed but that may not translate to a lower household bill.
Prices for Gardenia bread, the most popular brand consumed in Singapore, for example, have continued their uptrend unabated (up 15% over the past year), despite wheat prices having fallen by half in the past six months, as the chart below shows.
Plunge in the price of wheat
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Source: Bloomberg
This can be seen in petroleum prices coming off some 12.5% in the past 3-4 months, reflecting the 50% drop in crude oil prices over the same period.
(From a high of close to US$150 a barrel in July 2008, crude oil prices have halved to about US$70 a barrel currently.)
The lack of price correlation between retail goods with the cost of source materials is a reflection of how fragmented the end-customer market is.
Bread eaters, having a more fragmented customer profile than automobile drivers, are more likely to be price takers with little bargaining power.
Source: Bloomberg
This can be seen in how bunkering costs fell in direct tandem with crude prices, falling 50% from over US$700 a ton to about US$350 currently.
