By Neville Timothy Sanders & Nura Valentiana Lorna
KUCHING: Commodities are not an issue that the people are worried about; it is inflation that has the them in its grip.
The falling prices of commodities in recent months have sparked concern among some of the experts that it could lead to a global recession.
This was prompted by runaway inflationary pressures, and it could be an indicator that a recession is already taking shape in developed markets in the European Union and the United States of America (USA).
As for Malaysia however, some economist felt that this trend would not affect the country as a whole as commodity is just a small proportion of the product exported by the nation.
Economic expert Professor Emeritus Dr Barjoyai Bardai from Tun Abdul Razak University (UniRazak) said that palm oil is only less than five per cent of the country’s gross domestic product (GDP) at RM72.3 billion, and palm oil is not the only exported commodity in Malaysia.
“We export more of manufacturing products, air conditioners, electrical products, electrical chips, oil and gas and petro-chemical products and so on. So palm oil is just a small part of that,” he told New Sarawak Tribune recently.
He then pointed out that palm oil is important because it involves more than one million farmers, including FELDA settlers.
The lowest price was in 2018, about RM1,700 per ton. Now the expected price is at RM4,200 and that is already more than double the price we had in the past four years though the price peaked at RM7,200 this month.
“So, we see our fellow FELDA settlers have been enjoying such a good harvest in these past few months.
Therefore, it should not be so bad when it faces this trend,” he added.
Asked whether it will affect the county’s economy and the world as a whole, he felt that Malaysia should not be overly concern by it.
“Our economy has been doing very well for the last six months. It is poised to chart between five and 6.5 per cent for the whole year. So, in terms of the GDP, we should not overly concerned,” he said.
He said the country should now be focusing on the inflation rate, as other countries are also experiencing it.
Dr Barjoyai then provided the example where in the US, the inflation rate right now is over 10 per cent, while in New Zealand, it is over seven per cent and in Europe over 10 per cent.
“That should be our main concern, particularly in Malaysia, especially the increasing food costs, particularly cooking materials, that has led to higher prices of food.
“Our inflation rate is below three per cent. However, based on the statistical data, three per cent is not truly the real rate because it is a shielded inflation rate.” he explained, saying it is shielded by a lot of subsidies and price control.
“If we were to take out all subsidies and price control, our inflation rate could be above 11 per cent. The subsidies and price control have helped fellow consumers.
“It does not dampen their confidence and sentiment about the market. That said, in terms of inflation rate it is quite under control,” he added.
He said food prices are the major issue at the moment as prices have gone up overall by 5.2 per cent. For some items it reached nine to 10 per cent.
“If we look at the food consumption, the rate has reach over nine per cent, so we should be concerned about this habit of eating outside,” he added.
He urged consumers not to spend their money too much on eating outside because it will lead higher cost of food prices and high cost of living.
“So all these need to be balanced in the sense that we should educate and inform consumers that they should not be overly concerned about the falling prices of commodities as the situation will slowly return to normal,” said Dr Barjoyai.
