Manufacturers are expected to maintain the prices of goods in the short term following a recent hike in domestic diesel rates to avoid adding a burden to people's cost of living, says the Federation of Thai Industries (FTI).
"Manufacturers say they need to raise goods prices, but they will try to keep them steady because they don't want to put more pressure on the economy and people's purchasing power," said Kriengkrai Thiennukul, chairman of the FTI.
"Higher product prices is not good for sales volume."
Mr Kriengkrai made the comment after the board of the Oil Fuel Fund Office last month decided to increase the retail prices of diesel by 0.5 baht to 30.94 baht a litre.
The hike came after the diesel excise tax cut of one baht a litre expired on April 19.
The state diesel price subsidy paid for by raiding the Oil Fuel Fund also ended on March 31.
The tax cut and the subsidy helped to keep domestic diesel prices below 30 baht a litre.
The FTI said it is worried the increase in diesel prices will drive up logistics costs, causing manufacturers to adjust product prices. Logistics costs in Thailand make up 15% of companies' operating costs on average.
Geopolitical conflicts, including Israel-Iran skirmishes, the Israel-Hamas war and the Russian invasion of Ukraine, have raised concerns over global oil price fluctuations, which could eventually increase diesel prices, said Mr Kriengkrai.
"We hope these geopolitical conflicts will not escalate, affecting crude oil prices," he said.
The Joint Standing Committee on Commerce, Industry and Banking said in April it would be acceptable if the government needs to increase diesel prices by 1-2 baht.
According to Mr Kriengkrai, the federation is urging the government to establish a joint committee comprising representatives from the state and business sectors to discuss and identify measures to address the long-term impact of rising energy prices.
By fostering this collaboration, the FTI expects to find sustainable solutions to mitigate the effects of energy cost hikes.