NST Leader: Stealthy inflation

THE government is trying hard to solve the cost of living crisis. This we don't doubt. But it is taking time. As the government gets tougher, the companies are getting "smarter".

Businesses have found a way to increase their profits: "stealthflation", a devious way to increase prices. Call it less for more. This the government must address for a quick resolution of the cost of living crisis. Some cases of "stealthflation" are obvious, others aren't.

Those tasked with minding ethical business must know both. Start with the obvious. Next time you reach out for your tin of favourite biscuits, check it out. Same price, but less on weight.

This is a price hike by stealth. Big names selling detergents have been doing this for years. Other industries have followed their lead. Established brands and newcomers do it, giving the impression that it is hard to find an honest company.

Yes, they wax lyrical about business ethics in print and online. Some even top ethics league tables. Some of the companies that sponsor the awards and those who win them lack credibility.

Like Enron Corporation of America, these companies think that they are the "smartest" in the market. Here is sound advice from Warren Buffett, a modern-day sage of the market, to these errant companies: "It takes 20 years to build a reputation and five minutes to ruin it." Give it a think.

Now for the more subtle price padding. Remember the days when an airline ticket included not just the reclining seat, but also food, blankets, in-flight magazine, et al.

Then came the low-cost airlines with their promise of cheap flights. It was a case of good news and bad news. The flights were indeed cheap. Those who could not afford to fly became frequent flyers. But it only lasted a while as more low-cost airlines started flying the crowded Malaysian sky.

Competition, not necessity, is now the mother of invention. Today, low-cost means almost everything other than the seat comes with extra charges. Passengers may soon be required to pay for the use of the toilet hints The Economist, which quotes low-cost Ryanair's boss, Michael O'Leary, as once having suggested it.

Even the regular airlines have begun to ape the low-cost airlines by charging for this and that. Now not everyone can fly. It is back to buses for the frequent flyers. But that leaves a headache for the government: how do you bus people to and from Sabah and Sarawak across the South China Sea? Well, you just can't.

Our free market capitalism is running wild. Even nasi kandar outlets are going as crazy as shopping malls by introducing gated parking lots with their "you park at your own risk" notices. This is outrageous. Such eateries have between 50 to 70 per cent profit margin and yet they want more.

A case of insatiable hunger for profit? Most certainly. The so-called free market is only free for businesses, not for the consumers. Prices of food to farm products, and prescription drugs in between, have spiked over the last year.

What inflationary pressures are these under for the prices of some to double and even triple? Many economists among us say the market must be allowed to self-regulate. It just can't. The government must step in where the market has failed.

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