Expert explains why prices of food skyrocketing and the role consumers play

06 May 2022 07:30am
Prices of food and vegetables surged further during the Raya festival
Prices of food and vegetables surged further during the Raya festival

SHAH ALAM - Cartels, cost of logistics, higher demand during Raya, and the Ukraine war are pushing the prices of meat and vegetable up, says an expert adding that traders are likely to take the opportunity to further push prices unless the rakyat reacts.

Economist Barjoyai Bardai of Universiti Tun Abdul Razak said the recent hike is due to supply and demand.

"The demand during Hari Raya and the opening of borders has increased demand for goods and the supplies are not able to cope so the only way out is to increase the price." he said to Sinar Daily.

On March 31, the Malaysian Federation of Hawkers and Petty Traders Association president Datuk Seri Rosli Sulaiman was reported as saying the price hikes were inevitable due to inflation. It was reported that the price of whole chicken had gone up from RM6 per kg prior to the Covid-19 pandemic to RM6.50 eight months ago and RM8.80 at present.

The price of carrots has doubled from RM8 per kg at the onset of the pandemic to around RM15 and RM16 now. Cucumbers were sold at RM3 (per kg) then, and now at RM5.50, he added.

"The price of red chillies shot up from RM10 per kg to RM13. Thai chillies are now priced at RM15 per kg from RM13, while cili padi (bird's eye chilli), which was RM8 per kg in 2020, is now being sold at RM16 per kg," he was further quoted as saying.

Barjoyai said the second reason for the hike in food prices is logistic cost.

"Internationally, logistic cost increased to 30 percent but in Malaysia, this was aggravated by fuel cost as the petrol and diesel price went up causing a rise in logistic cost." he said.

Barjoyai further said cartels also play a role in the recent food hike reported in the media. He said cartels play a hand in rapid food prices, including frozen meat.

"Maybe there are fruits and vegetable cartels too," he said.

The fourth factor, he said was the Ukraine invasion by Russia. Western countries and the United States have imposed sanctions on Russia after the invasion over two months ago.

"There is a short supply of corn, soya bean and grain. Malaysia is considered lucky compared to many countries as the price of bread as gone up." he said.

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Barjoyai added in Malaysia prices of cooked food jumped skyrocketed as seen in Ramadan Bazaars and restaurants, this he said is due to a hike in raw materials.

However, he said some traders may be hoping to make a quick buck to recover from the loss during the pandemic.

One of the ways forward is for consumers to react to the price hike to ensure traders don't push prices of goods to high which may further hurt the pockets of consumers.

The consumer price index (CPI) for food increased 4% in March 2022, contributed by the price increase in rice with side dishes at 6.6% and Murtabak's 6.2% price rise, according to the department of statistics.