PETALING JAYA: Food prices have steadily increased this year and Malaysians need to avoid eating at expensive hawker stalls because lower demand can curb high prices, say economists.

They also said Putrajaya should consider reducing the country’s dependency on imported food and create a stable reserve of basic food ingredients as a long-term measure to address increasing food costs.

Sunway University economics professor Yeah Kim Leng said that by eating at home more frequently, Malaysians could prevent hawkers from increasing their prices.

Although this would involve a change in lifestyle, preferences and habits, “an autonomous reduction of consumer demand” in response to high prices is an effective antidote to high inflation, he said.

“There needs to be greater consumer education, information dissemination and consumerism to combat unreasonable price increases. Consumers could avoid patronising outlets that have raised prices unreasonably as lower demand will curb high prices,” he added.

To ensure hawkers are able to earn a decent income while keeping food prices low, Prof Yeah said there should be adequate food courts and the encouragement of healthy competition among food vendors.

“Efforts to promote entrepreneurship across all segments of the food and beverage industry will be helpful to ensure healthy competition and sustainable low prices for consumers.

“Keeping entry barriers low by facilitating the ease of obtaining permits, and low licensing, rental and other input costs are also helpful to maintain an adequate level of intense competition that would ensure low and sustainable prices for consumers,” he added.Citing the breakdown of Malaysia’s Consumer Price Index (CPI), Prof Yeah said the “food away from home” subgroup rose by 6.6% in 2022 and 6.7% in 2023, before easing to 3.1% in January.

“Hence, eating out costs were more than twice the national average CPI inflation of 3.3% in 2022 and 2.5% in 2023 and 1.5% in January 2024. Hawkers’ food price increases are reflected in the ‘food away from home’ component of the CPI basket,” he said.

Socio-Economic Research Centre economist and executive director Lee Heng Guie said the government must reduce the country’s dependency on imported food and create a sufficient supply of staple foods and ingredients.“Also, a strong ringgit helps to keep imported prices low and increase consumer purchasing power,” he said.

For example, Singapore manages its food imports by having diversified sources, and its strong currency has preserved its household purchasing power, he added.

“The rising cost of food ingredients and higher utility bills were cited as contributory factors for (vendors) to raise their prices to preserve their margins, though some absorbed the cost to preserve their regular customers and market share,” said Lee.

Centre for Market Education (CME) chief executive officer Dr Carmelo Ferlito said the inflationary effects now were due to the introduction of expansive fiscal policies backed by low interest rates during the previous years’ Covid-19 lockdowns.

“These policies could not show their effect during the lockdowns because the economy was depressed, and those effects are visible only now that the economy has stabilised,” he said.

Ferlito credited Bank Negara with bringing inflation down, but said this does not mean deflation.

“It just means that prices are rising at a slower rate, but the lockdown effects, backed by the labour crunch and supply chain disruption, cannot be eliminated,” he said, adding that Malaysians should consider their spending choices and long-term financial commitments.

Ferlito also said the government should commit to fiscal discipline and a pro-market reformist agenda, which can create the right ecosystem for investments and lead to more higher-paying jobs for Malaysians.

https://www.thestar.com.my/news/nation/2024/03/25/let-your-wallet-do-the-talking