KL to slash pump prices again this week, hypermarts to reduce prices too

KUALA LUMPUR, Oct 28 — Malaysia is set to cut fuel prices again this week, while hypermarkets will slash prices as the government attempts to calm public anger over the soaring cost of living.

But while fuel prices will fall for the fourth time in as many months, the price of electricity, which rose by 12 per cent in June despite loud protests, will not be brought down.

The government has been facing pressure to lower fuel prices since raising them by an unprecedented 41 per cent in June, a move which had the knock-on effect of pushing up the general price of goods and services.

A litre of unleaded fuel was raised by 78 sen to RM2.70 in June, but the sharp fall in global crude prices — from around US$147 a barrel in July to around US$62 today — has allowed officials to reduce pump prices.

Prices were cut by 15 sen in August, 10 sen last month, and then 15 sen in the middle of this month, with the price of unleaded 97-octane fuel now at RM2.30 a litre.

Domestic Trade Minister Datuk Shahrir Samad said he expects the latest reduction to be no more than 15 sen a litre.

Officials say the moves to cut the prices of fuel and goods are aimed at easing inflation, which hit a 26-year-high of 8.5 per cent in August and remained at a still-painful 8.2 per cent last month.

But an economist at Bank Islam, Azrul Azwar, told The Straits Times that the government was being too cautious in its fuel price cuts.

“The main issue is that prices of other goods and services, like food, are taking their time to fall,” he said, adding that the best way to solve that would be to slash the cost of fuel by 50 to 70 sen.

“That should trigger a chain reaction among traders, producers and manufacturers to reduce their prices. Baby steps will not improve the situation,” he said.

There is a bright spot on the horizon for consumers feeling the effect of high prices, however, as hypermarkets are expected to slash the prices of products ranging from fruit to chicken this week, following meetings with government officials.

Mydin Hypermarkets, a big local player, will cut the prices of 300 to 500 items by up to a third from today, its managing director Ameer Mydin was quoted as saying in The Star newspaper. “Hopefully, others will follow suit,” he said.

But while the move will almost certainly be welcomed by struggling shoppers, many complain that it does not go far enough, after everyone from high-end boutiques to food hawkers raised their prices following June's fuel price hike.

One consumer, Dr Tan Eng Bee, complained in a letter to a local newspaper last week that high prices “speak of the greedy attitude of our business community who are extremely quick to increase their prices but are adamantly slow to react when the price of fuel is lowered”.

And Mrs Chen Lee, a 40-year-old housewife, told The Straits Times: “My favourite claypot chicken rice is so expensive now at RM5.80 for a bowl, and there is so much rice in it now and not as much chicken. I hope to see it go back down to around RM4.50.”

But whether or not Malaysians see a general fall in the cost of living, they appear to be stuck with paying more for electricity.

Energy, Water and Communications Minister Shaziman Abu Mansor said tariffs will not be cut as the bulk of the electricity supply is generated using gas and coal.

Meanwhile, with Malaysia also starting to feel the effects of the global financial crisis, Finance Minister Datuk Najib Razak is expected to announce an economic stimulus package next week, and reduce the growth forecast for next year from 5 per cent to around 3 per cent.

-TMI