Govt needs comprehensive approach to tackle ‘cost of living’ crisis

 

From Indrani Thuraisingham

Prime Minister Anwar Ibrahim is to chair the National Action Council on Cost of Living (Naccol) to address cost of living issues.

We, as a consumer movement, hope that in addition to considering fuel costs and prices of essential items, long-term measures to address the issue are considered at this meeting.

These meetings should be held on a quarterly basis and presided over by the prime minister till proper measures are put in place.

The current Consumer Price Index (CPI), which measures inflation rates by picking up prices of products purchased by households, usually urban consumers, is sometimes referred to as the cost of living index.

Although CPI may be lower than in other countries such as Singapore, the UK and the US, this is due to the fuel subsidy together with other subsidies, price ceiling and control measures, which do not really reflect cost of living.

As producers have to bear the brunt of price increases of livestock feed and labour shortages at the factory level, this results in a higher producer price index. As a result, producers tend to pass on these increases to consumers.

High producer price means consumers will pay more when they buy products.

The government’s action in doling out cash transfers to low-income consumers is a short-term measure to put off immediate effects of inflation on people, but this is unsustainable.

This year’s subsidies alone will cost the government about RM80 billion.

The domestic trade and cost of living ministry should do much more with its price monitoring mechanism, using technology and innovation to collect relevant data on price hikes and not merely rely on volunteers’ feedback.

For example, in the UK, consumer associations, in their monthly supermarket inflation tracker, recently found that prices of supermarkets’ own brands had gone up more sharply compared to other branded foods. But they still tend to be cheaper than the other branded ones.

They track and compare prices of 20 popular categories of food and drink products at eight major supermarkets to see how inflation is impacting everyday products.

The tracker is able to reveal which supermarkets have the highest and lowest inflation every month, which types of food and drinks are rising in price the fastest and how branded groceries compare to their own brands.

Therefore, the government needs to ensure:

• Instead of CPI, the emergence of a comprehensive Food Price Index that is “averagely weighted” and derived from a networked national supply chain data management platform, linking all farmers, producers and retailers.
• Targeted fuel subsidies for those in the B40 group as well as the lower M40 group must be implemented as soon as possible. The department of statistics had revealed that nearly 580,000 households fell from M40 to B40 group in 2020 and may now be bordering between the B40 and M40 groups. The government needs to address these vulnerable groups because people losing part of their income are contributing to the cost of living as well.
• Companies have to make their products much more affordable. The government must intervene to discourage profiteering and ensure the interests of farmers, producers and consumers are taken care of. Big supermarkets have the ability to make a difference to people struggling through one of the worst cost of living crisis.
• We need a transparent system of issuing approved permits (APs), directly to retailers, to prevent manipulation in the food supply chain.

 - FMT

Indrani Thuraisingham is secretary of Era Consumer Malaysia.

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