I MUST admit that I hardly do any marketing for the family. I seldom accompany my other half to buy food for the family from the wet market or groceries from the supermarket.It’s not that I’m being chauvinistic, but I always believe and trust my wife’s intuition and her food choices for the family. However, I finally decided to tag along one weekend for a perfectly legitimate reason.
With the rocketing prices of foodstuff, I wanted to find out how much RM50 could stretch and what type of food that amount would bring to a family’s table.
Not much, unfortunately. With prices spiralling for meat, chicken and fish, RM50 can only buy very limited choices and for some, it depends on the number of members in a household.
That brings to mind, at least conceptually, whether ‘zero inflation’ is attainable.
Before delving into this, we must remember that historically, Malaysia has an impressive record of high growth (average 7 to 8 per cent) with low inflation of about 2 to 3 per cent over some 35 years.
But it looks like the ‘honeymoon’ is over. During the 1960s, inflation was virtually non-existent — 0.4 per cent at one time despite a high growth rate of as much as 10.4 per cent in 1969.
However, in the 1990s, high economic growth (between 8 and 8.5 per cent) was associated with rising inflation from 3.3 per cent in 1990 to 4.7 per cent in 1992.
By 1995, the government decided to launch a ‘zero inflation’ campaign.
To some in officialdom then, zero inflation was arguably attainable. It was not a dream. It was not ridiculous and was a reasonable objective.
But as one critic and columnist Padmaja Padman pointed out, “there was zero imagination in the campaign”.
“Economists may never acknowledge it, but the ‘zero inflation drive’ has much in common with the limbo rock,” she wrote.
“It’s all about how low consumers can go to help bring down the inflation rate to at least 2 per cent or even less.
“Amid evidence of prosperity, the call to stretch the ringgit only fuels resentment among laymen, who continue to watch prices soar regardless,” added Padman, who was also referring to the month-long discounted sales on the first Saturday of each month, luring consumers to shop.
Retailers jumped on the bandwagon and launched sales but this also exposed customers to many non-essential items.
Did Malaysians end up spending more rather than spending less or did they spend more on non-essential goods?
Instead of coming up with a well-defined ‘zero inflation programme’ with targets for specific groups, no study was carried out to examine the spending habits at different income levels and geographical locations.
The campaign was claimed a success amid wide publicity that the response from participating traders was overwhelming.
Today, many Malaysians do not even believe in the country’s vital statistics, notably the index on inflation.
They feel in their pockets the impact of a large hole signifying ‘a miserable index’ at the end of the month when the food bill and all other fees and charges are tallied to their net take-home pay.
Rising prices have caused the impact of eroding their standard of living.
Adding to the headache of policymakers, everything is more expensive, inflation plus unemployment, and the oppressive pressure of inflation on a sluggish economy.
Certainly if there is inflation in another country from whom we buy goods and services, there will be price increases (imported inflation), assuming that the exchange rate remains the same.
If the ringgit depreciates against the currency of the trading partner, there will also be an increase in the price of the imports (by definition, inflation).
Luxury goods, for example, cannot have fixed prices. Food served in restaurants of differing standards cannot have a common price due to different levels of luxury delicacy, which contribute to the cost of the food.
Those who cannot afford luxuries can just buy ordinary or alternate products since the prices of luxury goods or services are quite irrelevant to the cost of living of the average Malaysian.
Inflation must be controlled or contained to prohibit exorbitant or unethical profiteering, particularly prices for essential goods and services for the low income bracket.
There seems to be limited effort in stepping up efforts to reduce inflation emanating from the supply side. We have been talking about the need to expand food production and reduce food prices, a major cause of inflation.
During rainy days, the price of fresh vegetables shoot up. It used to be a joke that the government will react with ‘grow your own vegetables’ advice. A former menteri besar even suggested that we grow rice on our rooftops.
This Chinese New Year, families celebrating the new Tiger year will probably have a leaner and more limited menu since the unusual cold winter weather has affected the exported supply of popular delicacies and vegetables to Southeast Asian countries.
Even if there is a limited supply, the imported food items are likely to be priced higher than previous years.
Whatever it is, inflation may be a people’s fight but it is definitely a losing battle. And it is true that rather than retailers and consumers trying to contain inflation on their own, only movers and shakers of industry and commerce can make the real difference.
Are they willing to do so?
(Comments can reach the writer at [email protected])