TO be fair, Economy Minister Rafizi Ramli, in his latest press conference, did mention that his ministry will be working with other ministries to come out with new policies to stave off inflationary pressure on food, aside from calling consumers to be more vigilant in eating out.

It would perhaps be more conducive for the minister to let the cabinet properly deliberate and decide collectively on how to truly tackle  cost of living issues before coming out and being ridiculed for telling consumers that they are the drivers of inflation. 

This is because there is certainly an element of absurdity that the best a minister, whose office is only second to the Finance Ministry on financial matters, could offer is to tell Malaysians to be more “price-aware” and learn to shop around for the best deals to force prices to go down.

While the minister’s intention may be benign, ordinary Malaysians already feeling the pinch because of the rising cost of living might perceive the statement as inconsiderate.

In fact, those who do not have much savings or barely able to provide are perhaps the most “price-aware” because to them, every single ringgit counts when it comes to buying food. 

Also, the minister might have given a wrong impression to the public when using his first few press conferences to press on the fact that the public is partly responsible for driving inflation up.

The public would be led to believe that they, instead of the government, are instrumental in stemming inflation and food prices would eventually go down once we all are in collective agreement on say, how much a plate of chicken rice should cost.

There is no denying that prices would adjust to a certain degree if consumers had more information, but it is debatable whether that would result in a comprehensive fall of food prices in the whole country. 

We must first recognise there is no quick and easy solution to fighting inflation and most deflationary policies involve taking money out of the public’s hand. The government could theoretically alter its monetary or fiscal policy to bring down prices.

The first involves raising the Overnight Police Rate (OPR), which might reduce the excess money supply and therefore deflate the price of goods and services.The government could, similarly tighten its belt by reducing expenditure.

It is safe to say that even these two proposals would immediately shorten the current government’s honeymoon and even bring it to its knees. 

There was a sense of relief just before the Chinese New Year when Bank Negara Malaysia surprisingly maintained its OPR – which means that most Malaysians are not ready to pay for a higher interest rate just yet.

As for the government’s expenditure, given that Budget 2023 would be the first tabled by this new government, it would be foolish for this administration to introduce new taxes or cut down subsidies to ease off inflation.

The prime minister would more likely introduce an expansionary budget with more cash aid. It should be noted it is unlikely that the economy minister would reverse these reflationary policies, and might increase inflationary pressure on goods. 

However, does Malaysia’s inflation merit such an intervention?

According to the Statistics Department, our country actually recorded a lower inflation rate as opposed to other countries such as the Philippines, Thailand, Indonesia and Korea.

Furthermore, the economy minister has confided that inflation would be expected to reduce further to possibly less than 3% by June.

Nevertheless, you are more than likely to still hear Malaysians lamenting on price increases in the foreseeable future especially when the war in Ukraine and supply shock still persist.

However, Malaysians’ complaints about cost of living predate the war and pandemic and this is because rather than inflation, low wage and stagnating growth are prevailing issues.

Malaysia remains an economy that relies on unskilled labour and according to an economist, the B40’s media wage growth only saw an increase of 22% from 2010 to 2021.

Even if inflation could be controlled at 2-3%, workers would not see a real increase in their income and they are not in any way better off than they were 10 years ago. 

Perhaps, we, as a nation, are barking up the wrong tree to demand a reduction in food prices. After all, if everyone has a living wage that matches their productivity, they will always have enough even for a rainy day.

We must also accept that a vibrant economy necessitates a nominal and steady inflation to prevent a deflationary spiral.

For that reason, the economy minister might be better off tackling Malaysians’ stagnating wage growth instead of banging on about inflation. – January 29, 2023.

* Kenneth Cheng has always been interested in the interplay between human rights and government but more importantly he is a father of two cats, Tangyuan and Toufu. When he is not attending to his feline matters, he is most likely reading books about politics and human rights or playing video games. He is a firm believer in the dictum “power concedes nothing without a demand. It never did and it never will”.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.