THE higher price of raw materials and labour shortage are driving up the cost of everyday items and Malaysians will be paying more for them, say industry leaders.

Higher transportation costs are also adding to the problem. A daily breakfast of toast, drinks and eggs has seen price increases of between 5% and 20%, a casual survey by The Malaysian Insight at several coffeeshops has found.

Malaysia Singapore Coffeeshop Proprietors’ General Association president, Wong Teu Hoon, said this is because the prices of ingredients such as condensed milk, eggs, bread and sugar have gone up.

“Prices of raw materials have gone up in every sector. But for coffee shops, the decision to raise prices is mainly driven by the labour shortage,” Wong told The Malaysian Insight.

“Even though the economy is recovering, it has been difficult to find workers. Even the cost of hiring foreign workers has gone up.

“A foreign worker’s salary used to be RM1,200 a month. Now it is between RM1,500 and RM1,600. The agency fee has also gone up from RM6,000 to RM9,000.”

He added that the freeze in hiring foreign workers has made things worse.

The recent government decision to allow foreign workers again is prioritising the plantation sector.

The foreign worker freeze started in March last year when Malaysia was put under a Covid-19 lockdown.

It was initially extended until the end of the year but Home Minister Hamzah Zainuddin announced yesterday that the government will resume intake of foreign workers, with priority given to the palm oil sector.

“Since some businesses cannot hire more workers, they reduce their output instead,” said Wong.

Prices of canned food and beer have also nudged up by 5%, according to reports.

In addition to food, the prices of car servicing and parts have also gone up after the interstate travel ban was lifted.

Tyre prices have gone up three times this year with an increase of 15% to 20%.

Malaysia Tyre Dealers Association president Goh Soo Chay said prices will continue trending upwards until the middle of next year before stabilising.

“Now we are experiencing the start of the price hikes,” he said.

Prices have gone up due to worker shortage, raw material costs and freight charges, he said.

“Although business has improved slightly, it is still not ideal. The industry has to hike up prices to cope with inflation.

“Some companies may not have purchased their inventory before the price hike. Now they have to spend more to purchase the same items.

“They also find it hard to get a line of credit due to the lockdowns, leaving them in a financial lurch when they want to purchase new inventories,” Goh said.

He added that tyres for heavy vehicles such as lorries and trucks are imported while cars mostly use locally-sourced tyres.

Both importers and local tyre makers have increased the prices of tyres due to the higher raw materials costs, he said.

It will be the same in housing prices as well, said Malaysian Institute of Estate Agents (MIEA) president Chan Ai Cheng, as there has been a surge in steel prices which will drive construction costs up.

“Thankfully, there has been no immediate surge in the prices of houses, but we are in a difficult situation.

“While the rising cost of materials will lead to an increase in property prices, the unemployment rate may cause many people to sell existing properties at below market price.

Clothing, too, will see an increase of 5% to 10%, said Ang Say Tee, the president of the Malaysian Clothing Wholesalers Association.

This will last until next year and is due to the cost of transportation and price of raw materials, with cotton and dyes, the main components, seeing the biggest price hikes.

Ang, who is also chairman of the Malaysian Fashion Wholesale Importers and Exporters Association, said the increase on the retail side, however, will not affect market demand as long as the economy is on a recovery track.

“People are also still on their ‘revenge spending’ after not being allowed out for a long period of time due to Covid-19 lockdowns.” – November 3, 2021.