The ‘artificial’ suppression of subsidised-cooking oil prices to maintain the ‘illusion’ that inflation is in check is the main culprit behind the shortage of cooking oil, alleged PKR today.

The opposition party said the decision to curb an increase in the price of cooking oil - amid the rise in prices of other goods due to high oil prices internationally and speculations that national polls are around the corner - was a political one.

Government-subsidised cooking oil is among key items in the Consumer Price Index (CPI) basket of goods used to measure inflation, which reached 3.6 percent last year due to high global oil prices.

PKR information chief Tian Chua said the decision has prevented supply and demand dynamics to function normally with regards to cooking oil.

It has also led to hoarding by companies and the subsequent shortage of cooking oil in the market, he added.

"The government a priori has made up its mind and decided that the CPI must be (maintained at) between three and four percent,” he told a press conference at the party headquarters in Kuala Lumpur.

“They don’t want to show ... that inflation has gone beyond 4 percent,” said Chua, adding that this was being done “in order to fool ourselves and investors.”

Wrong message

He said as government-subsidised cooking oil is among the key goods that can alter the CPI, the government does not want to risk further erosion of political support just before the polls by easing controls over the price of the commodity.

In February 2006, the government increased petrol and diesel prices by 30 sen, and is expected to do the same this year by between 30 to 40 sen.

Toll rates for six highways as well as public transport fares are also scheduled to rise this year, while flour was among the latest consumer items to have seen a hike.

At the same time, Chua said the government was giving “signals” to the business community that the increase in prices of goods and services would be allowed after the general elections.

“If the government is sincere about controlling inflation, they should (ensure) there will be no increase in prices even after the elections.

“There should be comprehensive anti-inflation measures to avoid a super- or hyper-inflation situation. Don’t create artificial data to mislead people,” he added.

On the same point, deputy secretary-general Dr Xavier Jayakumar said the government was giving the wrong message not only to its own citizens but to foreign investors.

“The government is misreporting and cheating the public just because they are trying to gain the favour of the rakyat for the general elections,” he said.

Chua called for the government reveal the real situation regarding cooking oil in the country as well as exports of the product. The price of cooking oil in neighboring countries Singapore, Thailand and Indonesia are reportedly lower than in Malaysia.

He also said the CPI basket of goods is outdated and should be reviewed given recent economic developments.