Bracing For Tougher Times

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By Fathol Zaman Bukhari

Bottom line is, inflation has affected us in more ways than ever. The government can no longer hide the truth from the public. Will a resource-rich country like ours go the way of Greece? The inevitable may happen…

The impact brought about by the hike in electricity rates and the removal of diesel subsidies for hauliers and deep-sea fishing vessels effective June 1 is already being felt. The sudden rise in energy costs has caught many by surprise. Prices of fish and fast-moving-consumer goods have escalated beyond the 20-percent margin predicted by market analysts following the announcement. Goods with fewer substitutes and higher demand experience a faster price increase while those which could be substituted witness a slower increase. This phenomenon is happening right under our noses.

Although most would dismiss price increases as something normal apportioning the blame on crooked businessmen instead, the problem on the ground is real. Just pop into your preferred sundry shop in your neighbourhood or better still, drop by a hypermarket or supermarket closest to you. Instinctively, it will dawn on you that prices are not what they were a month ago.

The standard wholemeal bread produced by Gardenia and High Five costs an extra 20 sen compared to what it was pre-June 1. A carton of chicken eggs at Tesco, Giant and Jusco is now priced at RM3.90 when it was RM3.60 in May. Top-range 2kg bottled cooking oil (sunflower or canola) has gone up by as much as RM5. It may not affect those in the upper-middle and higher-income brackets but it will certainly affect the working class, the lower and the middle-income groups.

The diesel subsidy removal for deep-sea fishing had owners up in arms. Their fleet of over 1,200 vessels nation-wide did not go to sea, as promised. The result was immediate. Fish became scarce; prices skyrocketed causing housewives to scout the markets for cheaper alternatives.

A cursory look at the Ipoh central market underscores the perception that prices of fish today are beyond the reach of many. Kembong, a popular fish of the rakyat, costs between RM15 to RM18 a kilogram. Sardine, another popular staple, is priced at RM12 a kilogram while top-range bawal tamban goes for RM45 a kilogram. Such mind-boggling prices were unheard of a month ago. Fish have now become a pricey commodity accessible only to the rich.

To arrest the situation the government has increased fish imports from Thailand and Indonesia, exceeding the 30-percent permissible limit. Will this option be the solution? The government has taken such drastic measure before but it is only good in the short-term.

With many foreseen deficiencies and the lack of a long-term development strategy, the fisheries department is up to its neck with problems. Besides problems of its own making, the industry also faces issues such as intervention by foreign navies, threats from pirates, invasion by foreign trawlers and foremost, manpower shortage. The fuel issue will only hasten the demise of the industry.

Trawler owners complained that it would cost them an extra RM10,000 to go out to sea without subsidised diesel. If that is the case, why is it then that Thai and Indonesian trawlers can profit when the price of diesel is much higher in their countries? Our fishermen are one pampered lot.

The government’s subsidy-rationalisation programme is affecting another key player, the haulage industry. Transportation tariffs have risen by about 20 per cent since June 1. The operators, having little motivation to absorb the cost, have passed it on to the consumers. This accounts for the rise in prices of fast-moving consumer goods in the marketplace.

Like always, the poor and the marginalised will be the hardest hit. Since take-home pay has not risen in tandem with price increases, consumers’ purchasing power plunges. A ringgit will not buy much. Malaysians’ favourite food, roti canai and teh tarik cost a ringgit each or more. Eating out is not something to gloat at as prices have spiralled out of control. A large-size pizza now costs RM50 a piece.

Bottom line is inflation has affected us in more ways than ever. The government can no longer hide the truth from the public. Will a resource-rich country like ours go the way of Greece? Inflationary pressure has prompted India and China to curtail consumer spending by reducing money supply in the market. How will Bank Negara react should the inevitable happen? Hike interest rates or print more money? We have no way of telling. The worse has yet to come. Only time will tell!