The Russia-Ukraine conflict is likely to add inflationary pressures on the Malaysian economy, but the severity of the impact would depend on how long the conflicts persist, economists chimed in to say.
Sunway University Professor Dr. Yeah Kim Leng said that although the price of cooking oil is likely to increase especially considering Ukraine is one of the largest suppliers of grains and vegetable oils.
“We are likely to see an increase in vegetable oil but considering that in the short-term it would not feature as significant expenditure in their household expenditure, it would not have a significant impact on their household expenditure, “he said.
Towards avoiding a significant increase in the price of cooking oil, the government could come out with subsidies that would assist the consumers although producers and smallholders of palm oil are likely to enjoy the bounties of increased prices.
He said that Russia and Ukraine were also producers of wheat and corn, and the increased price of wheat and animal feed is likely to increase the cost of vegetables and poultry that would be passed on to consumers.
Yeah, said that some form of subsidy must be given to the farmers to avert them from passing down the prices to the consumers. “There is potential higher food inflation that would already burden the consumers, and this should be minimised in the short-term, “he said
Another economist in a bank-based broking house said that while it is important that subsidies are given to consumers, it is also important that producers of vegetables and poultry be given subsidies as their incomes fluctuate.
He said that the government’s imposition of a ceiling price on poultry would only mean that producers cannot pass on the cost to the consumers, and they will be left to absorb the cost. “It is only fair that the subsidies be given to these producers, “he said
It was announced at the end Of January that the ceiling price of standard chicken has been lowered by 20 sen, bringing it to RM8.90 per kg, and this price will be in effect for four months. Prime Minister Datuk Seri Ismail Sabri Yaakob said the new ceiling price would be in effect from Feb 5 to June 5. In addition to this, the price of eggs would remain at the same rate as under the maximum price scheme, also to be in effect until June.
Economists have already said that the Ukraine crisis is a significant inflationary event that will present the US Federal Reserve with a dilemma on how to conduct its monetary tightening programme. A prolonged crisis will threaten global economic recovery.
