Monday, October 26, 2015

How people are coping with rising prices

Food and drinks sellers are known to have increased their prices and/or reduced their food portions or diluted or substituted ingredients in their drinks.

I noticed satay sellers have excluded onions, while 'ketupat' is now replaced with 'nasi impit' in plastic bag. Soon the art of making 'ketupat' will be lost. The portion sizes can easily be adjusted down instead of increase in prices, to please customers. Roti canai is already downsized together with increases in price over the years.

In relation to the above picture in Facebook, I put myself in the position of someone who did not have one for some years: 'Roti satu! Wah, so small one ah? Lagi satu roti!'

Recently, there were reports of dubious meats used to pass off as mutton in some mamak shops. This is serious because cheaper beef or buffalo meat is against some religious beliefs like Hinduism and Buddhism.

A health-conscious retired teacher said it is better to have 'teh-C' instead of 'teh' which is already sweetened because it is made with sweetened condensed 'milk'. I corrected her that the so-called 'milk' is actually creamer: sweetened condensed creamer and evaporated creamer instead of the usual milk. Besides being difficult to find, actual milk products are more expensive than those made from palm oil. So how can we expect the coffee shops to use milk like before? It is funny how 'C' was derived: evaporated milk used to be supplied by Carnation! Now it is difficult to find real evaporated milk from Carnation. You are more likely to find them from Ideal or Marigold brands.

The consumers, on the other hand, are resorting to substitution too. Not that they are following Najib's past advice on 'change your lifestyle', but out of necessity. Imagine an average salaried employee trying to budget his or her daily expenses.

Top on the list is likely to be cutting down on eating in restaurants and stick to economy rice in coffee shops. To economise further, expensive items will have to be substituted with cheaper ones. Some households decide to cook at home instead of eating out. Besides, drinks, they can save on petrol and parking too. Even petrol has to be downgraded from Ron97 to Ron95! Instead of driving the kids to school or tuition centres, I have seen the kids cycling instead!

While the ordinary public suffer, some politicians are still living it up, instead of changing their lifestyles as examples to the people. When GST was about to be introduced, over-simplistic examples were used to show minimum impact on prices of goods and services. But now, almost everything, including some medication and insurance, are added on with GST. It has a compounding effect on inflation.

Once, I managed to calculate one hour parking charges at KLIA2 using Touch n Go (unlike at the toll booths, you cannot see your balances before or after parking): Parking Rm4.00 + 40 sen (10% surcharge for using TnG) + .03 sen GST! Many people complained why TnG charges 10% extra for users at the airports, discouraging instead of encouraging them. If not for the difficulty in finding the machine after locating the car, I would not have used TnG at KLIA2.

A friend who is having a company secretarial practice said she decided not to provide accounting services relating to GST, simply because she would rather have peace of mind by just focusing on her core business. It seems some of her fellow practitioners (and most accounting firms) who did, actually lost some clients because they just could not cope with the problems arising from the introduction of GST. Staff had to work long hours and spending time with clients, sorting out GST-related problems. This caused them to neglect their core business work. Some employees left after that. She said it is so difficult getting the right staff and it can be a real problem losing her experienced ones. She would rather not risk it.

As I have mentioned before, a small business would need to incur at least Rm10,000 extra in overheads per year, because of the GST software and follow-up services provided. So to whom does he pass on the extra costs?

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