Price hikes in essential goods of daily use has of late taken the centre stage in discussions among consumers.

Consumers are worried and continue to lament that they now find it difficult to make ends meet. This worry has further been fuelled by certain quarters who continue to exploit the goods and services tax (GST)  and thus the rally on May 1 this year.   

We cannot blame the consumer for this panic, for in reality, prices of essential goods have indeed seen increases.

This is evident from the Consumer Price Index, which has risen by 3.4 percent in April from a year ago. Furthermore, the government is also aware that price hikes of certain goods after the GST implementation is unavoidable.

Kudos to the Ministry of Domestic Trade, Cooperatives and Consumerism, which has responded swiftly by invoking provisions of the Price Control and Anti-Profiteering Act 2011 by hauling up businesses that increase prices indiscriminately.

While the government’s action is welcomed, any abrupt and short-term control measures to check businesses in lowering down prices will have an adverse impact on the overall economic growth.

Such an instant measure to lower the prices of goods is reckless if it dismisses the increased cost of fuel and electricity, which directly impact the overall profit margins of goods.

If businesses are unable to register healthy profits, they will not be able to expand their operations. Malaysia needs to see a healthy growth of domestic businesses, which are the main contributors to our gross domestic product (GDP).

The government has to identify and adopt other effective methods in addressing the issue of price hikes.

Government and private companies must collaborate to inject innovation and improve the supply chains and logistics, so that unnecessary costs can be eliminated and savings channelled back to consumers in the form of cheaper prices.

Competition among retailers must be intensified and more hypermarkets, both local and foreign, must be encouraged to set up branches, and to serve the rural areas in particular. The eventual beneficiaries of healthy competition are always the consumers.

A freer market under the watchful eye of the Competition Commission will also help.

Hypermarkets must be allowed to import critical products so that essential goods are not in any shortage, even during peak and festive seasons. The availability of essential items at all times will send a message to suppliers that unjustified price increase will not work in our market.

The Cabinet Committee on Prices chaired by the deputy prime minister should include all major hypermarket operators as these retail proprietors are able to share their insight on product price movement by pointing to the exact area of leakage in the supply chain and help mitigate the pressure on food price inflation.

This cabinet committee should also move on and evolve into a National Price Council.

Finally, it will have to be strict enforcement, backed by full political will, to weed out profiteering. Cosmetic arm-twisting may work in the short-term, but with adverse long-term results.

SUKHDAVE SINGH is secretary of the Perak Consumer Movement.