DAP chairman Lim Guan Eng today urged the government to establish a price stabilisation fund (PSF) to address inflation.

He said the cost of living will continue to escalate without such a buffer as the ringgit is weakened and labour is scarce.

“Apart from the B40, the M40 and the small- and medium-enterprises (SME) will be the biggest losers because no government assistance is offered.
 
“The declining ringgit has only added import costs for businesses while the acute labour shortage has not only adversely affected economic growth, with businesses not daring to accept new orders, but also driven up labour costs,” Lim said in a statement.

The government has refused to set up a proposed RM5 billion fund to stabilise prices, he said.

Instead, he said only RM1 billion is provided to chicken and poultry breeders until next month to stabilise chicken and egg prices.

“Despite that, supply shortages are still expected because chicken and eggs are still sold below cost.”

This is due to the rise in prices of feed such as maize, which now costs 14.8% more, wheat (60.9%) and soybean (19.9%), he said.

This, he said, has caused chicken prices to increase by 17.2% 

“The government continues to disclaim any responsibility by blaming soaring food prices on escalating food production inputs due to the war in Ukraine, supply shortages, supply chain disruptions caused by the Covid-19 lockdowns in China, and high logistical costs.

“However, no mention is made of the negative impact of the depreciating ringgit and the acute labour shortage in hiking up the inflation rate.”

Lim added that Malaysia’s inflation, the consumer price index (CPI), increased 3.4% in June 2022 from a year earlier, led by the rise in food prices of 6.1%, does not reflect the actual situation due to controlled pricing of certain essential items.

“The June producer price index, which rose by 11.2% in May, will reflect a more accurate picture of the current situation.”

He said that the ringgit fell to a five-year low of RM4.46 against the US dollar on Tuesday and is inching towards a record low of RM3.21 against the Singapore dollar. 

“The ringgit’s depreciation against two of our three biggest trading partners in the US and Singapore, will only cause inflation to spike.

“An indicator of how bad the current situation is can be seen by the price of 5kg of cooking oil at RM19 under Pakatan Harapan but now it is sold at more than RM45.”

He said the government had tried to downplay the seriousness of a 3.4% in June, saying that was lower compared to Singapore’s 5.6%. 

Such a comparison is meaningless when the purchasing power parity (PPP) per capita of Singapore is almost four times that of Malaysia, he said. – July 23, 2022.