Jul 24, 2008

A 27-Year High Inflation (7.7%), Fuel Price Increase Again?


A new record set in Malaysia, the Consumer Price Index (CPI) for June spiked to a 27-year high of 7.7%. This information is just too hard for me not to share with people. It seems that, with price of oil increasing in the international market, the subsidy supported by the government increases more and more.

The government will not be able to sustain the subsidy without widening the budget deficit. It’s already tanking at 7.7% and should the oil subsidy be maintained by year end, our budget deficit might balloon up to 9-10% of GDP at the end of the year, at least that’s what my source is telling me.

I think the exact words used by my source were “the country is going to the dogs”. So, my friends, I wish I am proven wrong on this one. And we know Pak Lah and Najib has given their utmost assurance that oil prices will not be increased at all this year, but anything can happen in Malaysian economic and politics.

I have to say that now’s the time to take out your deposit and hedge everything: rice, sugar, milo, coffee, tea, mineral water etc. I know some of the items above a controlled item, but it seems the real prices always more than the government controlled price.

You can also go to your barber and hedge prices of haircuts, your school bus operator, your tuition center for your kids, your motor oil change mechanic, your mechanic for car maintenance and the monthly bills. Why don’t you try hedging with your Nasi Campur and your Roti Canai. For all you know they might agree and you could save a bundle in the future. Should we suffer like this? Most of the Malaysian has been living quite comfort, and the time now is for us to join the league of Zimbabwe, Sudan, Ethiopia and Haiti in the economic status.


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