Trade product prices set for nasty spike in Q1

VAR Probrand unveils research suggesting effect of rising costs in China

Volatile exchange rates and the rising cost of materials and labour in China are set to cause a sharp hike in IT product prices during Q1, research has indicated.

VAR Probrand has released figures claiming that, during the first part of the year, raw material costs in China will spike 27 per cent, with the cost of labour going up 30 per cent. The Birmingham-based reseller runs procurement portal The IT Index, which tracks the prices of more than 650,000 products through UK distribution.

Probrand says product prices across all sectors have been "growing considerably over the past six months". The laptop market is singled out as one area where new technology and component shortages will fuel an increase in unit prices.

Peter Robbins, managing director of Probrand, said: "AMD's new chip technology will drive changes in low-end laptops initially, whilst Intel is set to dictate movements in higher-end laptop product in the early part of 2011.

"Add to these changes the introduction of over 70 new tablets in early January and the market increases its heat even more. This last factor is already creating a component shortage in China and that, in turn, will drive up technology prices."

Robbins added that any increases would come as "a culture shock" to an industry used to product prices declining over time.

He said: "This is one of the most volatile price and stock periods the IT industry has seen and buyers need to forge trusted partnerships with the right suppliers who offer best practice support and deep levels of supply chain information, pricing and stock."