"It declined sharply at the beginning of the year to a
low of 0.1% in February, but climbed up post-GST to peak
at 3.3% in July, giving consumers a jolt in prices," it
said.
There was also a clear pervasiveness of price hikes
across the CPI's basket of goods, the weekly noted.
Pre-GST, the share of items in the CPI basket with
inflation of more than 4% was at 11%. In the three
months post-GST, it jumped to 32%, and then to on 41% by
the second half of the year, as firms that had initially
absorbed the new tax started passing it on to customers,
it wrote.
And once prices go up, they hardly come back down again.
As a result, not surprisingly, the Consumer Sentiment
Index dipped to a record low of 63.58 points, dipping
"even below what was seen after the global financial
crisis in 2009", as consumers became reluctant to spend,
the paper noted.
However, while GST seems the easy target to blame for
inflation and the slow down in domestic demand last
year, it shouldn't be regarded as the only cause. After
all, it only contributed to a 0.7 percentage point to
headline inflation in 2015, according to Bank Negara
statistics, which is actually lower than originally
anticipated.
The government's subsidy rationalisation plan, the
plunge in the ringgit's value against the greenback, and
in some cases the mechanics of the free market, were all
factors that also pushed up prices.
While the weekly's cover story looks into the effects of
these factors and cited experts' reiteration that the
GST is a "fairer" tax regime that has "come at the right
time to shore up Malaysia's otherwise stretched public
finances", it also noted that these arguments may still
pale in comparison to consumers' sense of being
"short-changed". Especially in view of the fact that the
government has made little effort to keep to its promise
of spending more efficiently.
For though the government originally allocated RM273.9
billion under Budget 2015 (80% of which goes towards its
operating expenditure), it is now asking for more money
— specifically RM5.99 billion in Parliament — to pay for
what it actually spent in 2015.
Has the government, which used to be seen as helping out
the rakyat, become one that is now counting on its
people to "help out an administration whose finances are
not in good shape"? Pick up a copy of The Edge Malaysia
from newsstands around you today to find out more.
Source ::: The Edge Markets, dated 26/03/2016.