Tuesday, 26 September 2023

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Malaysian consumers to brace for predicted soaring food prices starting August

KUALA LUMPUR, MALAYSIA – Industry players are predicting food prices to increase between 5 to 20 per cent starting from August based on projections of the weakened ringgit against the dollar as well as the country’s reliance on imported ingredients.

The anticipated rise in food prices is attributed to a combination of factors, including increased transportation costs, rising global commodity prices and disruptions caused by weather-related events which put pressure on the production and distribution of essential food items, leading to the expected price hike.

Nivas Ragan, the president of Kuala Lumpur and Selangor Indian Chamber of Commerce stated that since January, its members have been experiencing a 20 per cent increase in production and operation costs.

“The effect in prices for products at the consumer level will also increase and I predict that in this third quarter, consumer goods’ prices will increase at least by 20 per cent, if before this there is a product sold at MYR10, it will increase to MYR12.50 at least,” he said.

Nivas further elaborated that the consumers will be facing the effect of imported inflation as the whole supply chain sees increases in costs subsequently leading to the price hike.

Imported inflation pressures

Imported inflation pertains to the inflationary impact caused by the escalation in prices of imported goods, which can result in elevated costs of local production due to the price surge of materials and components.

Datuk Ameer Ali Mydin, the managing director of retail chain and hypermarket Mydin, attributes delayed arrival of products in the country as a factor contributing to the forecasted increase of good prices between 5 to 10 percent starting from next month or September.

He noted that aside from the weakened ringgit against the dollar, the escalating business costs have also further contributed to the expected surge.

“This includes the minimum wage hike, the increase in utility bills and others, when the cost of running a business goes up, certainly it will increase the cost of production and ultimately the cost of goods to the consumer,” he explained.

Inevitable price hike for sugar

The sugar retail market will also see an exponential rise in non-price controlled sugar due to high input costs.

Touted as being of the cheapest in South-East Asia at just MYR2.85 per kilo ceiling price, the country’s sugar producers have been urging the government to increase the price of sugar which was last adjusted in 2018.

Chaang Tuck Cheong, the president of Malaysian Bakery, Biscuit, Confectionary, Mee and Kuay Teow Merchants Association, was cited as saying that based on industry players 20 per cent increase prediction for sugar, would mean that the selling price for 50kg of sugar could go up from the current MYR160 to nearly MYR200 a pack.

Chaang added that production cost could be minimised if the level of sugar in pastries, confectionaries and other products can be kept modest.

Presently, the plans to increase sugar ceiling prices is still being discussed and final decisions have not been announced.

Price rationalisation will not affect the ‘people’s sugar’ says Minister

The Deputy of Domestic Trade and Cost of Living Minister, Senator Fuziah Salleh was reported as saying that any increase in sugar prices will not affect the government-controlled retail prices for coarse sugar and refined sugar which has been classified as ‘the people’s sugar’ as it is used by the public.

She said that the wholesale 50kg sugar packs sold by producers are not included as government-controlled items therefore the price of coarse and the people’s sugar will remain at the ceiling price of MYR2.85 per kg and MYR 2,95 per kg respectively.

Fuziah also said that the country’s two main sugar refiners, MSM Malaysia Holdings and Central Sugar Refinery Sdn Bhd will continue to produce sugar at 24,000 tonnes and 18,000 tonnes per month as dictated by the government-set quota.

“With every kilogramme of sugar they produce, they are doing so at a loss, but the government is still maintaining he ceiling price due to the current high cost of living situation,” she explained.

The minister confirmed that the government has granted the permission to sugar refiners to sell a novel product called pure white refined sugar at market prices targeting those who are able to pay premium prices.

With the purpose of to offset losses incurred from the production and sale of people’s sugar at a considerably lower maximum price which MSM has commenced selling this product since May.

According to Syed Feizal Syed Mohammad, MSM group chief executive officer, it is unavoidable for the prices of sugar, which are not regulated by the government to rise and this increase will align and be more in line with the market price of sugar.

“Price rationalisation is something that is inevitable in all products due to higher input costs, including forex and sugar, and there is no exception to this,” he stated further.

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