PUTRAJAYA, Dec 23 — An ecosystem based on price data from across the country to inject price elasticity and supply will be developed in an effort to help control inflation in the future.
Economy Minister Rafizi Ramli said the ecosystem that will be launched within a month will be developed and driven by the users themselves which will help increase elasticity on the demand side.
“I hope we can provide an ecosystem where buying habits are largely influenced by reasonable prices, (so) a trader for example wants to raise the price of the food he sells from time to time, he thinks twice, it is not that easy.
“The ecosystem has to be driven by consumers if we can build in the vast amount of pricing data that we have and find ways to incorporate that into the user’s screen habit, which I hope will be driven by the public and from there we can see how far we can do,” he said in a press conference on the publication of the November 2022 Consumer Price Index (CPI) here today.
Rafizi said the government will not be directly involved in developing a platform for the ecosystem but instead will help those who are willing to develop the ecosystem by providing data related to the average price of certain goods obtained from the Department of Statistics Malaysia (DOSM) and the Ministry of Domestic Trade and Cost of Living (KPDN).
He added that consumers need to play a role in making the supply and demand for goods more elastic, including not buying products that are sold at a higher price than before, so that indirectly the price of an item does not rise too high.
Rafizi said consumer behaviour in Malaysia shows that even though the price of goods continues to rise, consumers are seen to be willing to pay at the price offered by the seller.
Stressing that he does not recommend consumers boycott a trader, the minister said that consumers are instead encouraged to buy from traders who sell at reasonable prices.
“It is not a boycott but you don’t have to buy, it means he has many substitutes. If you get people more aware of fair price accountability, at least we want to manage both sides of demand and supply so that demand does switch and substitute.
“What it means is, if the price charged by a dealer is felt to be too high compared to the average price of other dealers, it is appropriate for consumers to stay away from that dealer so that the reduced demand factor will pressure the dealer to lower the price,” he said.
Rafizi said the data from the November 2022 CPI shows that one expenditure category that most affects inflation is the price of food and non-alcoholic beverages, which is the largest expenditure group for households.
“Weighing 29.5 per cent of all household expenditure categories that determine the CPI, food items and non-alcoholic beverages are the largest expenditure group for households.
“Expenditure on food and non-alcoholic beverages is divided into food at home (at 16.9 per cent of expenditure) and food outside the home (at 11.5 per cent of expenditure),” he said.
Rafizi said in general, if the price of an item becomes expensive, consumers will buy less and that will ultimately affect the price charged by suppliers, but that is not the case with the price of food items and non-alcoholic beverages among Malaysians, including in terms of the habit of buying food outside the home.
Even though the prices of food and non-alcoholic beverages continue to rise, people continue to buy and pay at the higher prices charged by traders, and this contributes to the increase in the price of food and non-alcoholic beverages that continues to rise.
”For example, for the month of November 2022, the inflation rate remains at four per cent because it was driven by the increase in the price of food and non-alcoholic beverages which rose at a rate of 7.3 per cent for November compared to 7.1 per cent the previous month.
“This increase is partly due to the increase in the price of ready-to-cook food, especially those based on chicken and flour,” he said.
Efforts to control inflation require the cooperation of all parties, from the government, traders, to the people.
“The ministries are now actively developing immediate measures to remedy the value chain on the supplier side to ensure that prices do not rise with sufficient supply.
“At the same time, I think we should raise the public’s awareness to be more agile in responding to the increase in the price of food and non-alcoholic beverages to ensure that the relationship between supply and demand is more flexible,” Rafizi said.
Meanwhile, when asked how the government can help reduce the impact of targeted subsidies on the people, he said he hopes a mechanism that will allow subsidies to be distributed fairly to eligible recipients can be developed next year.
”The question is what system or index yardstick is used to determine which individuals can receive subsidies and which cannot.
“I remember the challenge that the government has now to not only ensure that the mechanism and the index is fair so that it does not fall out, but it is also very important that it is implemented quickly,” Rafizi said.
The mechanism needs to be developed as soon as possible to enable the government to distribute subsidies and financial assistance to the people in a targeted manner.
“We have to expedite a proper rollout of a sophisticated and if possible index-based targeted subsidy system hopefully very soon (a matter of months rather than years).
“We need to reallocate resources from a blanket subsidy that is tied to disposable income, household size and consumption. Hopefully, we can get the landing in a matter of months so we can get a date for such a system to be rolled out,” he said,
— Bernama
