Expect prices of goods to go up again

SHAH ALAM - Prices hike for items are expected to take place again following the increase in the Overnight Policy Rate (OPR) for the third time within a year.

An economist, who is also Universiti Sains Islam Malaysia Economic and Business Faculty Senior Lecturer Dr Mohd Faisol Ibrahim said the hike will involve certain items such as food and services.

He said Bank Negara Malaysia (BNM)’s step to raise the OPR had be implemented to control the inflation rates that would go higher if left unchecked.

"So the government is forced to raise the OPR rates. When the OPR is raised, of course it will impact the users especially those involving bank loans, such as raising the rates of vehicle and housing loans.

"Businesses and suppliers affected by the increased OPR will raise their prices with the excuse of bearing the expensive costs, as an example a product from a small and medium-sized enterprise (SME) would be raised other than the price of chicken for the same reason.

"Why did the price of the chicken feed increase? It is due to the supplier facing high rates from loans and eventually raised the prices, effecting users who are forced to buy much more expensive items," he told Sinar Harian on Thursday.

On Thursday, the media reported the BNM Monetary Policy Committee (MPC) decided to raise the OPR by as much as 25 basis points to 2.50 per cent.

BNM's announcement regarding the raised OPR was the third time this year.

In May and July, the country saw a rise of 25 basis points to 2.25 per cent compared to the lowest recorded level at 1.75 per cent previously.

Following the rise, the highest and lowest corridor for the OPR was raised each to 2.75 per cent and 2.25 per cent.

Faisol said each ministry involved needed to create a scheme or mechanism of price control to ensure users would not be burdened with the raised cost of needs and such.

"If the government implemented the initiative regarding controlling the price of goods the price hike could be managed.

"For example when the chicken prices were raised excessively, the government could set a ceiling price to ensure that the price would not go beyond that and each vendor must obey the ceiling prices set," he said.