Govt urged to fix ceiling price for bottled cooking oil

 

The government must use a controlled float system for bottled cooking oil, similar to how they control the price of petrol and diesel, says analyst. (Bernama pic)

KUALA LUMPUR: The government should fix the ceiling price of bottled cooking oil for local consumption to prevent excessive price hikes, said Asia e-University economic analyst Shazali Abu Mansor.

He said cooking oil is a basic essential household item and is also used in the hotel, restaurant and cafe segments.

As such, he said, any drastic price increase would directly impact the public in their daily use of the commodity and also affect household and business spending.

“The price must be controlled as it will affect the country’s economic growth, whereby consumers will reduce spending and begin to limit other expenses to buy the increasingly costly cooking oil.

“An uncontrolled increase in the price of cooking oil will also lead to other problems, such as traders raising their food prices,” he said.

He was commenting on the price increase for the 2kg and 5kg bottled cooking oil over the last few days, increasing from between RM9 and RM10 to RM12.50, and from between RM25 and RM28 to RM33.50.

In a statement, the domestic trade and consumer affairs ministry said the government did not fix the price of the bottled cooking oil because it was not subsidised.

The government only set the price of the 1kg subsidised cooking oil in polybag packs at RM2.50 per pack.

The ministry said the price of crude palm oil, which is the main component in cooking oil, was decided by the world market.

Currently, the price of crude palm oil in the world market hovers around RM4,300 per tonne compared with around RM2,500 previously, which is equivalent to about RM4.30 per kg before being processed and bottled.

This means the cost of crude palm oil has shot up to RM21 for 5kg, without taking into account other costs such as processing, bottling, transportation and profit at the factory, wholesaler, distributor and retailer levels.

However, Shazali said with Malaysia being one of the largest producers of palm oil in the world, it was illogical for local consumers to bear the burden of its price increase in the global market.

He suggested that the ministry use the controlled float system for the price of bottled palm oil, as had been done to decide the prices of petrol and diesel.

But a maximum price must be set even though it was not a subsidised item as a long-term solution, he said.

He also suggested that the government implement the windfall tax on palm oil producing companies which reaped huge profits from the current hike in the price of crude palm oil globally. - FMT