Vietnam authorities have asked four dairy firms to explain their price increases after some products were raised up to 18 percent.
The companies will be subject to legal responsibility if their increases are found irrelevant to input costs, the Finance Ministry said in a statement December 9.
Early this month, Mead Johnson, Nestle Vietnam, Tien Tien Distribution Co. and 3A Pharmaceuticals which distributes Abbott formula said they would increase their prices 2 percent to 18 percent for some formula products for children under 6 years old, Tuoi Tre reported.
Some Abbott and Mead Johnson products are already sold with around a 10 percent price increase.
The firms said they have faced increasing costs, including materials, tariffs and labor.
Vu Quoc Tuan, a diplomatic from Nestlé Vietnam, added that its factory in Thailand was flooded, causing big losses.
The prices of many Nestlé, Friso and Dutch Lady products increased 3 percent to 15 percent in September.
Nguyen Anh Tuan, a price management official, said businesses that want to raise prices only need to inform concerned agencies of the increases with appropriate reasons, Nguoi Lao Dong reported.
Tuan said the authorities will intervene to punish the firms and ask them to go back to the old prices.
According to the retailers, price increases at the end of the year are a familiar scheme among dairy businesses. At that time, retailers are mostly storing confectionary and beverage products for the Lunar New Year festival, so dairy firms inform retailers they will be increasing their prices to force retailers to store dairy products ahead of the increases.
But analysts said that many foreign dairy formulas are already being distributed at three times more than the costs.
Nguyen Minh Phong from the Hanoi Institute of Socio-Economy Development Studies said milk price increases badly affect the consumer price index and is sad news to many people.