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Sunday, July 14, 2024

A time for price cuts

By Vo Dinh Tri, PhD

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When low-price goods and services are preferred, it means consumers are having lower disposable incomes. This phenomenon is now seen in many European countries as well as in China, but the reasons vary from inflation to deflation. In search for affordable goods to cope with higher expenses In many eurozone countries, chains of budget supermarkets and stores have been popping up and attracting consumers as inflation has mounted. Such names as Action, GiFi, Stokomani, Primark, Aldi, and Lidl have become more popular owing to their competitive prices. The strategy embraced by these brands is that quality is compromised to have lower prices, prioritizing heavily-discounted goods offloaded by suppliers. Inflation has shown signs of abating, but its pressure will persist longer than expected by policymakers. The eurozone core inflation in July still stayed at 5.5% while the headline inflation eased a little bit to 5.3%. Therefore, the target inflation of 2% for 2023 looks beyond reach, with many economists predicting this can only be attainable in 2025. To put high inflation under control, central banks have resorted to interest rates as a key policy. The European Central Bank (ECB) within one year between July 2022 and August 2023 has hiked interest […]
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