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Falling Oil Prices Bear Goods News for Consumers, but Bad News of Producers

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Published on : Dec 29, 2015

The global consumer goods industry is on a rebound. Consumer sentiments are becoming more and more positive, driving the sale and production of consumer goods today. Companies are also finding innovative ways to market their products to increase penetration into lesser aware regions. But at the same time, the two largest regional markets for consumer goods, North America and Europe, are experiencing a downturn due to a decelerating economy and shifting consumer trends. Conventional goods are taking a hit as consumers are focusing towards alternative categories. This is somewhat mitigated by the increasing disposable incomes and spending power of consumers in the BRICS nations and the MEA countries.

It still could go either way for the global consumer goods industry, as factors such as inflation rates, wage cycles and rations, and saving of market players are expected to change over the coming years.

One such factor that is massively affecting the global consumer goods industry is the tumbling oil and gas sector. This double-edged sword hold directly above the head of the consumer goods industry could change the way it works. Simply put, oil prices are falling and while this is very good for individual consumers, producers and market groups are expected to suffer the weight of responsibilities are they fall lower on the supply-demand see-saw. The current struggle of the oil industry spells major headaches for producers of energy. Uncertainties continue to hang over the oil and gas sector, with most experts saying that the industry’s future is likely to remain low. This will result in a direct increase in spending of consumers in consumer goods after all the money they will be saving on filling gas in their vehicles.

Oil prices have dropped by nearly two-thirds of their June 2014 peak, a time after which nations such as Saudi Arabia and the U.S. began producing record levels of oil, while developing economies were on the road to consuming less oil. Iran further added to the oversupply with nearly 500,000 barrels of oil per day.