Friday, December 24, 2010

Who is Najib kidding with minimal impact price hikes?

When one is earning RM3,000 a month, with no extra mouths to feed and cloth, single and live at home with parents with no housing and car loans to cover, a 20 sen increase in your favourite 'teh tarik' or Milo is quite insignificant.

Now substitute this with a 'real life scenario' of 'married with kids' to feed and cloth, insurance, car, housing and credit card loans to cover, you'll feel the pinch.

This is the type of scenario that DAP is spewing about.

The average household income in Malaysia in 2007 was slightly over RM3,500 a month. The take-home pay after mandatory deductions in such a scenario would in all probability be about RM3,100.

Now minus a car, housing and creditcard loan, this individual is poor by urban standards and a 55% hike in a consumer item will definetly hurt the household budget!

Which incidently is exactly what has happened since January 2010, according to DAP's national publicity chief Tony Pua.

The cost of white sugar, which is a core consumer item on every household list, has gone up 55%.

In July, the government launched a surprise “5-in-1” price hike programme, raising the prices of RON95 and RON97 petrol, diesel, white sugar and liquified petroluem gas (LPG) including cooking gas cyclinders as much as 15.2%.

"Then on Dec 3, 2010, less than 5 months later, they had another series of hikes.

"This time the price of RON95 went up five sen to RM1.90 per litre, diesel by five sen per litre to RM1.80 and liquefied petroleum gas (LPG) by five sen to RM1.90 per kg. Sugar was now RM2.10 per kg.

"In fact for white sugar, inclusive of a 20 sen hike in January on top of the 25 sen and 20 sen hike in July and December, prices have increased by more than 55% this year alone," said Pua.

Failed maths

He said the Kuala Lumpur & Selangor Coffee Shop Association's recent announcement debunked Prime Minister Najib Tun Razak's claim in July that the price increases will have “minimal impact” on households in Malaysia.

The association had announced a proposed 20 sen increase in beverage prices.

"In July, Pemandu said the new teh tarik price, having taken into impact the subsidy reduction of fuel and upward price adjustment would be around RM1.0155. They advertised this in full page advertisements across all major mainstream newspapers.

"But in reality the 'teh tarik' and 'kopi susu' price was RM1.20. Now with the 20 cent increase these beverages will go up even higher," he said.

According to Pua something is seriously wrong with the method used in calculating matters involving our economy and our leadership's understanding of simple arithmetics.

"Someone in Pemandu has failed their mathematics. Firstly, there is a clear contradiction in “teh tarik” prices between the fact sheet issued in July which was only RM1.00 as compared to the new base price of RM1.20 in the December fact sheet.

"The government must explain the “mysterious” 20% increase in the base price between July and December, " he said.

He also accused Barisan Nasional and Pemandu of "living in a parallel imaginary universe" of price hikes involving increases of 1.55 sen or even 1 sen.

"I had issued a statement in July arguing that Pemandu should be “commended” for the audacity to publish such numbers which are at best applicable only in a fictitious and theoretical universe, and at worse, showing the complete lack of understanding of real world market dynamics on the price of goods and services.

"And to prove my point, it was reported yesterday in all major Chinese newspapers that the Kuala Lumpur & Selangor Coffee Shop Association has announced the proposal to increase all beverage prices by 20 sen starting Jan 1, 2011.

"Kopi susu and the milk prices will be increased from RM1.20 to RM1.40 translating to a massive 16.7% increase in prices!" said Pua.

Stop spewing hypothetics

He said even the price of everyone's coffeeshop favourite “herbal tea” will be increased from RM1.10 to RM1.30 which is an 18% price hike.

"And Pemandu has the audacity to claim that “herbal tea” prices will only increase from RM1.00 to RM1.012 or just a 1.2% increase

"In fact, out of the 70 everyday food and drink items listed on the Subsidy Rationalisation fact sheet, no item is expected to increase by more than 1.9% after the most recent round of price hikes!

"What is perhaps most embarrassing is for the Domestic Trade, Cooperatives and Consumerism Deputy Minister Tan Lian Hoe to argue that a 10 sen increase in beverage prices “will be more reasonable”.

"A 10 sen increase will still result in a 8.3% increase for the price of “teh tarik” and “kopi susu”, 10 times higher than the 0.83% increase claimed by Pemandu.

"The government should stop spewing these ridiculous and out-of-these-world hypothetical data which demonstrate at best its sheer incompetence and irrelevance," Pua said - FMT.

4 comments:

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I.F. said...

While I've no comments about tea and stuff, I think oil price hike is necessary. Oil subsidies will forever be a drain on the National Treasury.

But IMHO, it would've been better to slash the Sultans' allowance, for they are already rich.

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