Beware of price gouging amid Mideast turmoil

 Beyond economics, price gouging is also a moral issue. Malaysians must be vigilant and reject exploitation to safeguard the interests of all consumers, especially the most vulnerable.

When global oil prices rise, prices across the board also start to rise but not all of these increases are warranted.

Many price hikes are opportunistic price gouging, where sellers increase prices substantially beyond the increase in their own costs. They take advantage of a “geopolitical crisis” to exploit consumers through money-grubbing profiteering.

In Malaysia price controls and subsidies for petrol and diesel hold down cost pressures. By regulating the prices of essential fuels and offering financial support, the government helps to cushion the impact of global oil price fluctuations on consumers and businesses alike.

These measures prevent sudden spikes in transportation and production costs, which would otherwise ripple through the economy and exacerbate inflation. The price of subsidised RON95 has not changed and eligible transport and logistics companies are still getting the same quota of subsidised diesel as before.

Of course some price adjustments are unavoidable, especially for imported goods unaffected by domestic fuel subsidies but this does not justify the claims of many businesses and business associations that all price hikes are unavoidable due to global instability and increased operational expenses.

There is mounting evidence that businesses in some sectors are using the pretext of international uncertainty to justify price increases that are not warranted by the real economic data. In the latest inflation data for March, prices for personal care, social protection and miscellaneous goods and services rose 7%. Insurance and financial services prices rose 4.9%.

It is not only consumers who suffer. Micro, small and medium-size enterprises (MSMEs) are also falling victim to price gouging by wholesalers and delivery firms, who are raising costs for small businesses and eroding already narrow profit margins.

These MSMEs now face added pressures. Inflated costs imposed by upstream suppliers harm their competitiveness and threaten their very survival.

This opportunism is particularly seen in logistics and haulage, where transportation costs are often inflated beyond fuel price adjustments. We see it in food outlets, where price hikes significantly outpace increases in ingredient or operating costs. In the latest inflation data for March, fuel prices rose by only 1.6% and food inflation actually fell compared to last year.

The dangers posed by price gouging are multifaceted. First, unchecked price manipulation undermines public trust. Second, when prices rise without justification consumption and sales fall, potentially triggering an economic downturn.

Third, price gouging disproportionately harms the most vulnerable in society. For the poor, those on low wages and those living on fixed incomes, even modest increases in the prices of essential goods can result in severe hardship.

Addressing these challenges begins with transparency. The ministry of domestic trade and cost of living must use its authority to investigate and sanction those engaging in unfair pricing practices.

Consumer vigilance is much more effective. Smart consumers switch their buying away from businesses and outlets that engage in price gouging and instead favour those that maintain fair and low prices. This sends a strong signal to the market by rewarding ethical business practices and discouraging profiteering.

Public awareness is vital. Consumers should be encouraged to report unjustified price increases and support businesses that demonstrate ethical conduct. Civil society and the media play a crucial role in highlighting malpractices and recognising responsible businesses, but social media is also effective.

Collective solidarity and sharing among smart Malaysian consumers are essential to highlight good businesses that are keeping prices low.

Posting on your favourite eatery or mom-and-pop store where prices are low also helps them to help you. Positive reinforcement of responsible business helps make sure price gouging is discouraged and called out. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.