Monday, October 20, 2008


Fuel prices down, but goods prices still up


More smiles came from motorists on last Oct 15, when the Government slashed the pump price of gasoline. This was made possible when the crude petroleum price plummeted to below US$80 a barrel. The drop of 10-20 sen for the price of fuel at the pump was the third in three months. The Government had reduced the price for 8-22 sen on Aug 23 and a further 10 sen on Sept 24. The pump price of petrol per litre now is RM2.30 (R0N97) and RM2. 20 (R0N92) while that for diesel is RM2.20 a litre. Obviously the public is expecting a similar drop in the price of consumer goods that had jumped when the Government increased the pump price of fuel last June 4. Prime Minister Datuk Seri Abdullah Ahmad Badawi has urged traders to take the initiative by reducing price of consumer goods rather than waiting for enforcement by the authorities. Abdullah said in the wake of the fuel price reduction, the traders have the social obligation to reciprocate the move by also lowering the goods price. Consumers’ grouses on the high price of goods have snowballed particularly during the last Ramadan. However even after the Aidilfitri, price of daily essentials remains high especially in rural areas and small towns. Thus, many are not really happy with the latest reduction of fuel price as they are still reeling from the impact of the high cost of living due to the price of consumer goods still hovering high. Some even sardonically said that it is too late and the traders would never be willing to bend backwards and reduce the price. However some argued that the hike in petrol price was not the sole factor that had pushed up the price of other goods. In early 2008, the world experienced a food crisis where drastic shortage of commodities like wheat flour, sugar, corn, soya bean and rice occurred. Chief executive for the Federation of Malaysian Consumers Associations (Fomca) Mohd Yusof Abdul Rahman had this to say: “Most of the raw materials for the country’s food production is imported. Hence, the hike in the price of these commodities would have a significant impact on the cost of food production. “That is why the price of some goods had increased even before the June 4 jump of fuel price,” he told Bernama. He said some fresh items like fish, meat, chicken and vegetables did not really follow the fuel price fluctuation. “Apart from transportation costs, price increase is also due to factors like the supply. That is why the price of fresh produce fluctuates,” he said. The same applies for cooked food like nasi lemak, mixed rice and kuth. When the price had moved up, it would never go down, he said. For regulars at the Pasar Tani (farmers market), they might find that the price of daily essentials is still within control as compared to that at the wet market. The reason is that the Federal Agriculture Marketing Authority (Fama) ensures Pasar Tani traders adhere to the guidelines issued on the price list. “At each Pasar Tani, Fama displays the price list for selected items at the agency’s secretariat counter, as a guideline for consumers and traders,” said the Senior Director for Fama’s Entrepre Development and Who, Division, Abdul Wahid Mat Razi. He said Pasar Tani traders required to display the price tag their goods and they are bound 1 the markets trading regulations. As of Sept 30, 2008, there are 294 farmers markets nationwide, recording RM285.75 million in turnover during the first nine months of the year. Meanwhile, secretiry for the Kuala Lumpur Vegetable Wholesalers Association Low Teik Kim told Bernama that overall, the price of greens is still within control. for cucumber, long beans and red chili. This happens at the weekend as many Muslims are halding their open house,” he said when contacted. Low said cucumber has to be imported from Thailand to meet demand and control its price. As for the red chili, he said there was a slight increase in price due to the weather and supply factors and also because the association had stopped importing the item from China and was depending on the local supply. Low advised consumers to exercise their options when buying vegetables. “If people stop buying, then the price would automatically fall,” he said. For the manufacturers, their usual excuse to increase price is the high operating and transportation costs. When a hike in price occurs, a reduction later is unlikely. “The recommended price is among the reason. Supply of goods is based on the contract price and transportation cost agreed,” said Mohd Yusof. He said this happened as there is no price watch system in the country. Mohd Yusof said the only price watch system available is that for the price-controlled goods under the Ministry of Domestic Trade and Consumer Affairs. “Under the Price Control Act (1946), traders are required to display price tags. Hence even if the price is high, as long as the traders show the price tag, it is not an offence,” he said. Fomca, for so long, has been calling for the setting up of a commission responsible for the watch over the price of goods. Mohd Yusof said the federation has also urged the government to enact the Fair Trade Act as a price- regulatory mechanism. He said at present, the ministry holds negotiations with producers of goods not within its control in order to control price. Thus, the Government has to provide incentives for the producers to keep the price down. “At times, the negotiations were successful and on other occasions, failed. There were times when the price was jacked up without the knowledge of the Government and consumers, particularly for the daily essentials or that bought once a year like furniture or electrical appliances,” he said. He also said the recent drop of petrol and diesel price is not that significant when compared against the immense 78 sen jump last June 4. The issue where consumers are confused or deceived over the price of a certain product is nothing new. Mohd Yusof said this usually happened over products in new packaging canned and infant formula milk products. Even with the same amount or quantity, the new pack usually exhibits a higher price. - Bernama