GEORGE TOWN: Gerakan has urged the government to address the root cause of inflation following a Bank Negara Malaysia (BNM) statement that Malaysia's inflation increased to 3.2 per cent in the fourth quarter (Q4) compared to 2.2 per cent in the third quarter (Q3) of 2021.
Its vice-president Datuk Baljit Singh said the consequences of reopening the business sector in the country after almost two years of disruptions from lockdowns would definitely be extremely sluggish.
He said, with the supply chain being disrupted due to erratic demand among consumers, it was only natural that inflation would creep into the economy.
"It is unsettling for consumers to be paying more for many items, especially essentials such as food and healthcare services, but this is the reality now. We read of reports that there is an acute shortage of eggs. Such situations like this were never heard of before.
"However, to insist on raising the minimum wage to RM1,500 is not a step in the right direction. It is akin to making the inflation problem even larger. Higher wages will only drive consumer prices higher as it does not address the root cause of this inflation which is the spike in the actual costing due to the uneven patterns in the supply versus demand factors.
"What Bank Negara and the Finance Ministry should be doing is to intervene in ensuring that the costs of products and services can be lowered instead," he said today.
Baljit said Bank Negara and the ministry should be inspecting transport service providers to ensure that there was no profiteering while fuel prices continued to be fully subsidised.
He said they should also be speaking to the agriculture authorities to find ways on how the country could boost production and yields to offset the growing need to import food which is quoted in the US Dollar denomination.
"As much as we have a shortage of foreign labour, there is a shortage of food too, and if there is a need to import, perhaps we can source from other suppliers who can offer a cost-effective alternative or we can revive the barter trade concept with our neighbours.
"Employers must find ways to help ease the escalating living cost burden on their employees by perhaps offering subsidies for food to those working from homes, as after all they end up saving costs on office use such as electricity and water.
"Utility companies from Tenaga Nasional Berhad to water supply authorities should not consider hiking rates for now until the inflation rate is brought under control," he added.
Baljit said the raising of interest rates remained a viable option if inflation continued to shoot up.
"However, we should first also explore other tools and options available.
"We must seriously address claims of profiteering going around among suppliers, especially those who want to make a fast buck at the expense of the consumers.
"While it is nice to enjoy salary increments, we should be focusing on lowering the living costs as this is the best option," he noted.
BNM had recently announced that Malaysia's headline inflation increased to 3.2 per cent in Q4 compared to 2.2 per cent in the Q3 of 2021.
It said the higher inflation during the quarter was due mainly to the normalisation in electricity prices following the lapse of the three-month electricity bill discount implemented in July 2021.
It also said that core inflation increased marginally to 0.8 per cent during the quarter from 0.7 per cent in Q3 of 2021 as economic reopening gathered momentum.
Governor Tan Sri Nor Shamsiah Mohd Yunus had said that the average headline inflation for 2022 would likely remain moderate as fuel inflation's base effect dissipates.