Rice price hike: Efforts should be taken to fight greedflation
SHAH ALAM - Everyone, including the government, should play a role in combating 'greedflation', where companies pass on cost increases to customers to protect their own profits, says expert.
Malaysia University of Science and Technology (MUST) Provost for Research and Innovation Professor Geoffrey Williams said although the hike is extremely minor, it should be absorbed by merchants, with the additional expenses spread over all of their items to alleviate the strain on rice.
"Because the price of local rice would not be reduced, customers should be wise and move to Malaysian rice, which is less expensive.
"Everyone, including the government, should help to counteract greedflation, which occurs when businesses pass on cost increases to customers in order to safeguard their own profits," he said, adding that rice prices may climb this month as greedy businesses may pass on costs to consumers.
Williams also said the businesses are also demanding bigger subsidies and threatening Menu Rahmah by claiming that charging RM5 per meal will become more expensive.
"As a result, we must know that shop and restaurant owners justify raising prices, requesting subsidies, or eliminating services. "Actually, the increase in imported rice prices is so minor that it may be absorbed by businesses rather than passed on to consumers, Williams said.
Prices fluctuate, so if prices decline in the future, businesses will not lower their rates to consumers; therefore, the government should not be misled by this noise, Williams added.
Starting next month, consumers can expect an increase in the price of imported rice on the market, with an increase of RM1 to RM2 per 10-kilogramme (kg) bag.
This trend is primarily due to the ringgit's devaluation as well as rising labour and electricity prices.
Meanwhile, Bank Muamalat Malaysia Chief Economist and Social Finance Dr Mohd Afzanizam Abdul Rashid said that food prices in general have risen significantly.
"Food and non-alcoholic beverages, which account for 29.5 per cent of the total consumer price index (CPI), increased by 6.6 per cent in the first five months of this year compared to 4.1 per cent in the same period last year.
"Rice, bread, and other cereals, which accounted for 3.5 per cent of total CPI in May, grew by 6.0 per cent, somewhat less than the previous month's 6.4 per cent," Afzanizam said.
On that note, with the rise in rice prices, more money will be required to purchase the same amount of rice, although salaries have not increased insignificantly.
"This would limit purchasing power, particularly for those in the lower income bracket. Nonetheless, the influence is negligible for people with high incomes.
"In a nutshell, customers will change the way they manage their monthly spending. There will undoubtedly be trade-offs as allocations for other reasons may be lowered in order to acquire the same amount of rice," Afzanizam said.
Food costs in restaurants, he said, may potentially rise as a result as businesses seek to maintain their profit margins," he added.
Limoka Coffee Owner Azrul Hanaffi Rauzan said that the hike in rice prices would affect his business as rice remains an important ingredient in his cafe.
"To maintain the taste and quality of our main meal, we only use high-quality rice.
"As a result, this will affect around 10 per cent of our total raw material cost," he added.
Mydin managing director Datuk Ameer Ali Mydin said retailers are unable to absorb it because we only make RM1 to RM2 per 5 kilogramme and 10 kg bag.
"We will lose money if we absorb the cost because the rise is also about the same.
"Bernas should charge less to importers because many M40 consume imported rice. There will be no price increases because all imported rice flows via Bernas, and they should lower their prices," he added.
