Massive price hikes on the way for furniture

Manufacturers operating in the furniture sector state that the wave of price hikes is gaining momentum as the year draws to a close. The negative effects of the ongoing war in the Middle East have been added to the cost increases caused by high interest rates and persistent inflationary pressure. In particular, the significant rise in raw material and rental expenses indicates that product prices will increase significantly in the coming months.

Ahmet Güleç, President of the Furniture Associations Federation (MOSFED) and Vice President of the Turkish Exporters Assembly (TİM), stated that cost increases have become even more pronounced due to the failure of inflation to decline and the effects of the rise in April, adding, "Cost increases are felt more heavily by labor-intensive sectors. Due to the impact of raw material and labor costs, we expect an average price increase of 35-40 percent in furniture products by the end of the year. Because inflation is not falling, and this is directly reflected in our costs."

Emphasizing that rental expenses are one of the areas experiencing the most difficulty, Güleç said, "One of the points that affects us the most is rental costs. When a company wants to rent a shop to grow, it faces very high prices. Recently, rental expenses have increased significantly, and this situation negatively affects the production capacity of businesses," he said. Güleç also pointed out that the inflationary pressure created by the rise in material prices is increasing day by day, stating, "We have experienced an increase of up to 20 percent in our average costs since the beginning of the year."

Foam prices, which significantly affect the sector's costs, have also nearly doubled, especially due to war conditions. It is stated that raw material costs have reached an uncontrollable level as a result of the reflection of price increases in oil and petrochemical products on the supply chain. Güleç stated, "In addition, due to the price increase in petrochemical products caused by the effect of the war, some raw material prices in the sector have increased a lot. The price of foam has doubled. Such increases are not at levels that can be compensated for."

LOSS IN IMPORTS, HOPE IN EXPORTS

There are more than 45 thousand furniture manufacturers in Turkey, and almost half of these businesses export. However, in the first four months of the year, the furniture, paper, and forestry products sectors were among the areas that experienced losses in exports. The market loss in the Gulf countries, which account for approximately 25 percent of the sector's exports, due to the war is challenging exporters. Stating that an export target of 10 billion dollars is aimed for in the sector by 2030, Ahmet Güleç stated that the current uncertainty in the Gulf market and the Russia-Ukraine war are negatively affecting the sector.

Saying that May is a critical period, Güleç assessed, "The Gulf naturally worries us. Not just the Gulf, but the Russia-Ukraine war as well. May is critical, there are 14 working days. We do not expect an increase in May, but we foresee an increase starting from June."

Although a recovery in exports is foreseen in the second half of the year, problems stemming from costs and demand contraction are expected to continue in the domestic market. Players in the sector consider it certain that price tags will see increases approaching 40 percent by the end of the year.

News Source: 12punto