Prepare for big increases in cost of living in the next few months
By : Anti Wayang
Many people were disappointed that after the GST was reduced to 0%, the prices of goods did not reduce significantly or in some cases have increased.
Many traders cited increased demand for prices not going down or have now admitted that GST was not a factor in increasing prices for many basic food-stuff as these have always been exempted from GST.
Many manufacturers and traders gave the excuse that the imminent return of the Sales and Service tax (SST) in September meant that they did not want the hassle of reducing prices now and then having to raise it again in 3 months time. Thus prices stayed the same for many products and services despite GST being reduced to 0% earlier this month.
However, worse may yet come.
What made GST more effective in the past was that it covered more goods and services compared to the range which the SST it replaced covered.
The new Finance Minister has just said that they intend to increase the base of the new SST to make up for the loss of GST. This means that the Finance Minister has indicated that more products and services will now be taxed under the upcoming SST system compared to the old SST system.
So, we are basically back to square one.
It is very possible that it could be worse as SST is at a higher rate of 10% compared to 6% for GST. On top of that, traders and manufacturers could claim back a refund for input tax under GST which is not possible under a SST system.
This could mean that the cost for the manufacturers and traders will now increase under SST forcing them to raise prices even above the GST prices.
Some companies wishing to be transparent such as Proton (and several other brands) have already indicated their prices will increase in September when SST is back.
Another major sign pointing to higher cost and price increases soon is that the huge foreign capital outflow from our bond markets and share markets arising from the illogical political statements regarding our national debt from our new Finance Minister have now pushed up interest cost and capital financing cost.
For sure, the manufacturers will pass on these costs to us.
The big capital outflows have not stopped since GE13 and together with the populist policies have meant that a downgrade of our sovereign credit rating is imminent.
If we are downgraded, this continuous capital outflow could turn into a tsunami of outflow that will mean our Ringgit could plunge significantly.
Already, our Ringgit has blown past RM4.01 to the US dollars.
As we all know, many of the products we consume – especially foodstuff – are imported. Thus a significant weakening of our Ringgit will definitely drive up the price of goods.
And we have yet to also mention that if Pakatan carries through with their 100 days promise of increasing minimum wage, costs for our traders and manufacturers will further increase which will force them to pass on their cost increases to us in the form of higher prices too.
Let’s hope that my prediction based on the chain of events above does not materialize. But the signs are all showing that it will come true. How severe would the increases be, we shall soon see in the coming months.
By this time, many will know that the pre-election blaming of BN for price increases was mere propaganda and we could have ended up worse off by changing the govt and their policies.
Don’t you think that the PH govt can see this trend that you and I can see?
Of course they can. And they know it is due to their policies and actions.
One minister even tried to claim that price of meats and vegetables have fallen 30% to 50% due to GST abolished only to be called a liar or stupid by most Malaysians.
That is also why they are so busy attacking Najib every single day even though GE14 ended 5 weeks ago. They are even putting up new stories about long-ago cases like Altantuya and Teoh Beng Hock and trying to implicate Najib.
They are trying to divert attention and hate to Najib and BN so that people will focus less on asking why prices have not fallen but have increased instead.