No sugar, flour price hike, says Putrajaya

Putrajaya has assured Malaysians that the prices of flour and sugar will not be increased despite the recent hike in petrol prices.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek said the manufacturers of both essential items had given their assurance that prices of the goods will not be raised.

"Consumers do not have to worry as they also assured that the supply is enough to meet demand," Hasan was quoted as saying by Utusan Malaysia today.

As such, Hasan said there is no reason for retailers to simply increase the prices of their products.

Following the 20-sen hike in RON95 petrol and diesel on September 2 and a 15-sen increase in RON97 petrol two days later, Hasan had said that food prices are expected to go up only by 0.1%, quoting a study done by his ministry on the effect of the fuel price increase.

Prime Minister Datuk Seri Najib Razak had said the new prices will save the government at least RM1.1 billion this year. To cushion the impact of the increase on the public, Najib said the Bantuan Rakyat 1Malaysia (BR1M) payout would be increased this year.

Putrajaya subsidises and controls prices of many of essential items such as cooking oil, petrol, flour, bread, rice and others to keep the cost of living low.

However, over the years the subsidy bill has been ballooning and big across-the-board subsidies are not sustainable in the longer term.

In 2007 alone, the government spent RM40.1 billion in subsidies to keep prices in check. In 2009, about 22% of the government expenditure was on subsidies, with petrol subsidies alone taking up 12% of the total.

And from the RM30 billion subsidy bill this year, the fuel subsidy alone amounts to RM24 billion, the largest component in the provision.

Due to the subsidies, Malaysians did not feel the pinch even when the world oil prices went up, unlike their Indonesian counterparts who faced a tough time when the petrol price went up by 33% in one go about three months ago. - September 13, 2013.