Diesel price hike shouldn’t mean spike in prices of goods: Here’s why, according to economists
Workers refuelling diesel at a gas station in Telok Panglima Garang on June 9, 2024. — Picture by Shafwan Zaidon
Tuesday, 11 Jun 2024 7:00 AM MYT
Tuesday, 11 Jun 2024 7:00 AM MYT
- Economists polled by Malay Mail felt that an increase in diesel price should not affect prices of goods and services as most commercial transports are still using subsidised diesel
- Pinch should be felt by individuals who drive personal diesel vehicles, and do not qualify for subsidies in the first place
- Inflation and rising costs of living inevitable, but would likely not be driven by the diesel subsidy rationalisation
KUALA LUMPUR, June 11 — Several economists have sought to allay public fears, saying that the increase in the price of diesel this week to RM3.35 per litre should not have a noticeable impact on the prices of essential goods and living costs.
The economists polled by Malay Mail reminded the public that commercial diesel vehicles are mostly covered by the Subsidised Diesel Control System (SKDS), with Nungsari Ahmad Radhi highlighting that subsidies are still retained for almost all the major industries.
“Given that almost all public transportation, all logistics and all transportation companies still enjoy subsidised prices, how can that be true?” he told Malay Mail when asked if rising costs would result from setting a higher pump price for diesel.
Nungsari explained that the new diesel price would only affect private diesel car owners and also those smuggling diesel in a large scale.
He said the government has implemented SKDS 2.0, where qualified logistics vehicles can apply for fleet cards for subsidised diesel price at RM2.15 per litre — which is set to curb the impact on the price of consumer goods.
Similarly, he added that the SKDS 1.0 for land public transport vehicles including school buses, express buses, ambulances and Fire and Rescue Department remains at the price of RM1.88 per litre.
A man refuels his excavator at a gas station in Khantan Perak on June 10, 2024. — Picture by Farhan Najib
Following the announcement by the government on Sunday evening, Malay Mail reported that consumers were anxious about the targeted subsidy rationalisation move that replaced the previous blanket subsidy.
Consumers interviewed expressed their apprehension for another round of potential price hikes for essential goods that could drive up their monthly household spending.
In response, economist Mohd Nazari Ismail said that price hikes would be inevitable in the future but stressed that the change in the diesel price could not be the sole factor.
“Yes, prices may go up in the future. However, many factors may be involved in the price increase. The increase in diesel prices is one reason,” he said.
“In the long term, the main cause is a financial system based on a banking system that creates a lot of new money when lending money to customers. So, I will not correlate any increase in prices directly to the withdrawal of the diesel subsidy.”
Will the new diesel price affect me?This only applies to Peninsular Malaysia, for now
If you are a private owner of a diesel vehicle, you may be eligible for the Budi MySubsidi Diesel programme
If you are a company using diesel vehicles for public transportation, school buses, local buses, express buses, ambulances, firefighters, hearses and logistics, you can apply for the Subsidised Diesel Control System (SKDS) fleet card
To know more about this developing story, read Malay Mail’s wrap-up of the issue: All you need to know about: Malaysia’s new diesel price of RM3.35 per litre
Following the announcement by the government on Sunday evening, Malay Mail reported that consumers were anxious about the targeted subsidy rationalisation move that replaced the previous blanket subsidy.
Consumers interviewed expressed their apprehension for another round of potential price hikes for essential goods that could drive up their monthly household spending.
In response, economist Mohd Nazari Ismail said that price hikes would be inevitable in the future but stressed that the change in the diesel price could not be the sole factor.
“Yes, prices may go up in the future. However, many factors may be involved in the price increase. The increase in diesel prices is one reason,” he said.
“In the long term, the main cause is a financial system based on a banking system that creates a lot of new money when lending money to customers. So, I will not correlate any increase in prices directly to the withdrawal of the diesel subsidy.”
Will the new diesel price affect me?This only applies to Peninsular Malaysia, for now
If you are a private owner of a diesel vehicle, you may be eligible for the Budi MySubsidi Diesel programme
If you are a company using diesel vehicles for public transportation, school buses, local buses, express buses, ambulances, firefighters, hearses and logistics, you can apply for the Subsidised Diesel Control System (SKDS) fleet card
To know more about this developing story, read Malay Mail’s wrap-up of the issue: All you need to know about: Malaysia’s new diesel price of RM3.35 per litre
Where did these so-called economists graduate from? Ulu Kelantan U?
ReplyDeleteDiesel costs impact transportation costs, which find their way into most products and services.
ReplyDeleteHowever, objectively, while some products have quite significant transportation cost content, there are also many products where transportation costs are trivial or pretty low down in the cost breakdown.
That is why many products can be imported all the way from China and still undercut locally produced prices.
One of the unfortunate impacts of the diesel subsidy removal is it will be used as an excuse to raise most prices, even if the actual cost impact may be just 0.5%