Inflation rate likely to rise following hike in power tariffs

PHOTO: Inflation rate likely to rise following hike in power tariffs

PUTRAJAYA - Malaysia's inflation rate is expected to increase following the hike in the electricity tariffs, says Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar.

He said the inflation rate would increase each time there was a hike in the prices of essential items or a reduction of subsidies on utilities.

"When the subsidy for petroleum products was reduced recently, our CPI (consumer price index) in October rose to 2.8 per cent.

"We can expect the same thing this time around, but I believe the CPI will still be below 3 per cent," he said after launching the Malaysia Wellbeing Report 2013 here yesterday.

In Petaling Jaya, Malaysian Employers Federation executive director Shamsuddin BarĀ­dan said businesses and consumers would be strained with the double digit electricity tariff increase although he agreed that a review was necessary.

He added that there was a possibility of an increase in the prices of goods and services as well.

He pointed out that businesses and personal income could not grow by double digits in a similar time frame.

"Businesses may have to pass on the increased costs to consumers. Employees would also demand higher wages to meet a higher cost of living," he added.

Shamsuddin said he was worried the hike would put pressure on the inflation rate, which is currently at around 3 per cent.

Malaysia-Singapore Coffee Shop Proprietors' General Association president Ho Su Mong said he had advised his members to try and cut down on electricity usage.

He said their bills could run to between RM1,000 (S$390) and RM2,000 if the outlets had two iceboxes.

"We will try to adjust our costs. If we really can't, then we will have to pass it on to customers. How much it would be, will depend on the next few months," he said, adding that this was yet another blow after the sugar subsidy was removed.

Fomca secretary-general Datuk Paul Selvaraj asked the Government to explain the measures to ensure that the poor and low-income groups were minimally affected.

"Whenever we rationalise subsidies, it is important we have a social safety net in place to minimise the impact," he said.

Meanwhile, Netizens took to Twitter to comment on the increase.

@MAZainol: A burden to the people!

@Lony_HM: I wouldn't mind the #newrate if they'll give better service by then. Bukan blackout 4 hari dalam 1 minggu (But not blackouts four days in a week).

@PoorestPoor: What's the rationale of the increase? Minister cited competitiveness but at the expense of the poor?

@yusanidhy: Malaysian Government please justify the #NewRate of electricity increment. @NajibRazak @AliHamsa55

@SyeqaFabil: #NewRate did you want to increase the electricity rates due to you giving us a discount before this? Explain please.

@TunkuHarun: Up up all the way and down down the usage of electricity.

@sawcl: Why again west and east Malaysia are different? Why Sabah people have to endure higher hike when basic west RM900 east RM800? Sabah things are already expensive. Even food also. Why have to increase the peoples burden further?

@RonaldByrne: Back to candlelight.

@fadhlirez: Earning billions of profit, still increasing the rates?