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Things are getting more expensive

MALAYSIA is no exception to face rising prices of goods at this time due to the Covid-19 pandemic, in fact it is inevitable because it also happens all over the world.

Universiti Kuala Lumpur (UniKL) Business School economic analyst, Assoc Prof Dr Aimi Zulhazmi Abdul Rashid said, the weakness of the currency and the country’s dependence on imported goods such as raw materials and food further increased the impact of inflation and price increases.

He said the situation of rising prices of goods, especially in rural areas, was the real reality of the impact of the Movement Control Order (PKP) on the national economy.

“Rising transportation and logistics costs are the main reason for the increase in prices.

“There is no doubt that the cost of fuel such as diesel has not changed at RM2.15 at the price set by the government, as this is the main cost to the movement of land cargo in Malaysia.

“Yet the price of related goods such as tires and spare parts may cause transportation costs to increase.

“The increase is passed on to consumers directly,” he said.

He was commenting on the increase in prices of goods in rural areas outpacing the inflation rate in urban and national areas for two consecutive months starting last April based on data released by the Department of Statistics Malaysia (DOSM).

Through the Malaysian Economic Statistics Highlights-Series 7/2021 by DOSM published recently, Malaysia’s inflation was below zero in March 2020 until January 2021 due to the effects of the Covid-19 pandemic.

Urban inflation always outpaced rural inflation except in April and May 2021, when rural inflation began to outpace urban inflation.

Dr Aimi Zulhazmi said, the lack of activity or demand from the small and medium business sector, caused traders to turn to making profit recovery to the consumer sector, this is also one of the reasons for the increase in prices.

According to him, producers and suppliers of consumer goods had to shift the focus of the market from traders to consumers directly.

“Higher production costs due to compliance with SOPs as well as production which can no longer be at optimum levels due to control of the number of manpower or disruption from Covid-19 infection to workers, also confuses suppliers to reach breakeven.

“Rising global raw material prices such as iron have also affected production costs. In addition, the weak value of the Malaysian ringgit (RM) at RM4.22 against US $ 1 also has a double impact on goods imported from abroad, especially foodstuffs such as rice. onions and chillies.

“It is estimated that Malaysia imports no less than RM60 billion in food items a year.

“Adding to the cost of transportation from overseas importers has also increased the effects of the Covid-19 pandemic such as India and Indonesia,” he said.

Meanwhile, in terms of manufacturers, to address rising production and operating costs, it should be understood that if only 60 per cent of workers are allowed to operate on a daily basis, employers will still have to pay salaries to all employees as well as contributions from the Employees Provident Fund (EPF), Social Security Organization ( Socso) and the Inland Revenue Board (IRB).

“Obviously with only 60 per cent of the workforce, production is lower and has a financial impact on manufacturers,” he said.

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