When Pak Lah's government had given subsidies a no-no recently, they actually destroyed the General Price Index of our economy. The nearly immediate backwash effect was the increase in the price of nearly all goods and services in the economy.
It is because fuel IS the main source of energy.
This is what we called as a "cost-push" inflation.
Not only inflation, but we are now facing the highest inflation ever in 25 years, the rate is about 7 - 8 %. Meaning at present, if we have RM1,000 in hand, the "real value" of our money is being reduce to RM993 - RM992 in compare the previous month before the implementation of the hike took place.
Fuel prices will be lowered soon Prime Minister Datuk Seri Abdullah Ahmad Badawi confirms that the Government will lower fuel prices but remained tight-lipped as to when this will take place (THE STAR, 01.08.08)
Like always, I will nag about petroleum subsidies again and again.
But in order to do that, I have to rely on countless of if, if and if.
If government did not act too hastily and had not increase fuel price at 43% rate, the inflation rate definitely not as high as we are having at present.
If government maintain some respect over subsidies, they should have been anticipating the violatility of the market forces of fuel market. And if they did, they should maintain some amount of subsidies as buffers - to cushion the fluctuation effect; the up and down trend of the fuel global market.
The subsidies buffer is important IF you want stability in general price level.
If there is the increase in fuel market, government add more subsidies, and if the fuel price drop government reduce the amount of subsidies. This way, we stabilize the general price index. And this way, we will be able to avoid 7 -8 % inflation rate.
Now, Pak Lah's economists are going to revise the fuel price, a lower fuel price is expected in near future. But how can they pull back the already more expensive price of nearly all goods and services in our economy?
Will, for instance, a bundle of five packets of Maggi mee be reverted to RM3.60 - the market price of two months ago in Kota Kinabalu - from the current price of RM4.70? I bet not.
Comments
katak man |2008-08-03
aku sokong ko!!!
inilah pemimpin yang harus ditukar oleh kitaorg, bikin susah orang kampung saja.
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