Economy Minister Rafizi Ramli has urged consumers to play their role in controlling inflation in the country by avoiding buying from businesses that set exorbitant prices for their goods.
Speaking in a press conference on Friday (24 December), Rafizi said the analysis of inflation data showed the inelasticity of demand is the major factor driving prices up. In short, consumers still buy the same amount of goods even as prices inflate.
This then allowed traders to impose high price tags on their products since customers continue to buy from them.
“Only if there is reduced demand will business operators have an incentive to control their prices. If lessened demand does not happen, then you can’t blame them (traders) for passing on the higher price to consumers.”
“It has to be a collective effort,” he said, adding that the government, too, will play its role in addressing the supply side.
As such, Rafizi advised consumers to be more conscious of prices when purchasing items.
Government will do its part on the supply side too
Meanwhile, Rafizi said the ministry is not urging consumers to boycott sellers but there are a lot of substitutes that consumers can opt for instead.
“Of course, the government will play its role to address the supply side but we also need to start looking at tackling the demand side,” he said.
He added that the ministry will direct its attention towards fair price accountability by developing an ecosystem based on nationwide costs of food and beverage products.
“If the ecosystem is realised, then buying habits will be influenced by reasonable pricing and businesses will know that if they raise their prices they will lose customers,” he said.
“The most sustainable way to manage prices is to inject elasticity in supply and demand through better competition, which will happen with the public having better access to pricing information.”
November’s inflation stood at 4%
Earlier, Rafizi announced that November’s inflation rate remained elevated at 4% but was heavily influenced by the food and non-alcoholic beverages expenses category, which stayed above the 7% range.
Food and drinks made up the most of all household expenses, accounting for up to 30%.
Rafizi also said that while consumers are opposed to being told their spending habits are contributing to inflation rates, they must realise this for the betterment of the economy.
“However, hypothetically speaking from an economist perspective, if the demand has not gone down, then that means that prices are still okay,” he said.