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Thursday, January 2, 2014

Little price hikes add up to one big hole in pocket

Published: Sunday December 29, 2013 MYT 12:00:00 AM 
Updated: Sunday December 29, 2013 MYT 7:18:20 AM

WHEN it comes to price increases, the consumer is always at the losing end because what goes up hardly ever comes down.

In a free market when prices are determined, to a large extent, by supply and demand, the supplier always has the upper hand.

For some products, for example electronic items like broadband TV, prices do come down progressively because of newer models and technology updates. But these are products that are still considered as non-essentials except for those in the middle to upper classes who are more than happy and able to pay for bigger and better products.

To the ordinary consumer struggling to make ends meet, it is the price increases on essential items here and there that hurt the most.

Take stationery items where prices are expected to go up by 20% to 30% within the first quarter of next year.

The industry players have claimed that they are revising the prices, partly due to the increasing costs from the implementation of minimum wages and transport costs.

Other factors include the new electricity tariff rate, higher fuel price and the currency exchange rate between the ringgit and China renminbi, as most of the imported stationery items are from China.

And for good measure, they even add in the speculated increase in toll rates and the implementation of the GST in 2015.

Actually, the market for stationery products is not as small as we perceive.

Products like paper, clips, staplers, markers and board dusters are still very much used in offices, schools, institutes of higher learning and homes.

The paperless office is still a dream, even in the most environmentally-conscious country in the world.

In an immediate response, Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek has warned the Federation of Stationers and Booksellers Association of Malaysia, which represents these industry players, that they will face action under the Competition Act 2010 should they increase prices as they like.

He likened the proposal to increase prices as “a cartel activity to reap extra profit due to market monopoly”. Strong words indeed.

But from the point of business, the federation is basically trying to justify passing on the increased costs to the consumer.

At the end of the day, the consumer is the one who will determine whether he is willing to pay more for a dozen pencils and a stack of A4 paper.

The new school year is about to begin and we are hearing the familiar lament about essential school items like uniforms, shoes, bags and bas sekolah fares getting more expensive. Parents with a number of children still in school will testify that it is always little increases here and there that add up to one big hole in the pocket. Yes, even the price of a pencil can create a dent.

Which is why consumer behaviour is vital and the Government needs to do more to educate consumers to be smart and savvy. Price fluctuations are part and parcel of life but a savvy consumer will know how to stretch the ringgit and not fall victim to the ruthless businessman seeking to entice him to simply buy and buy.

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