Govt Interventions, Public Cooperation Key To Cushioning Fuel Price, Inflation Pressures
By Danni Haizal Danial Donald
KUALA LUMPUR, Nov 9 (Bernama) -- Government interventions to cushion the impact of rising global fuel prices must be complemented by public cooperation in managing fuel consumption to minimise inflationary pressures and protect household finances.
CGS International Securities Sdn Bhd head of economics Ahmad Nazmi Idrus said the government's targeted fuel subsidy mechanism under the BUDI MADANI RON95 (BUDI95) programme had served its purpose well in shielding consumers from the worst effects of inflation and protecting household spending.
While spillover effects on prices of goods and services that are not administered or controlled by the government remained, he said the overall impact had so far been manageable, as reflected in the moderate Consumer Price Index (CPI) performance.
“That said, the CPI is rising given the stronger feed-through effects and the struggle is on how the government manages this impact.
“Thus far, there have been measures including personal income tax cut, the RM100 SARA payout and minimum wage to help soften the blow,” he told Bernama.
On Malaysia's preparedness for potential global energy supply disruptions, Nazmi said the country had diversified its sources of crude oil and refined petroleum products to strengthen supply security.
“Compared to the period before the US-Iran war in March, Malaysia now has actually diversified its supply of crude and refined fuel.
“Based on our calculations, Malaysia has now secured oil from non-traditional sources including Brazil, the US, and some Sub-Saharan African countries,” he said.
Meanwhile, he said public cooperation through more prudent petrol usage, reducing unnecessary journeys and adopting fuel-efficient practices could help manage fuel consumption and minimise pressure on household spending and the national economy.
However, he noted that consumer behaviour was largely driven by prices and incentives, adding that further adjustments to fuel subsidies could be necessary to manage demand if supply constraints emerged.
“If fuel supply is again an issue, the best approach is to reduce the subsidy allocation again. It may not be popular, but it works,” he said.
On managing household finances amid volatile global energy prices, Nazmi advised consumers to adopt more strategic spending habits, strengthen their savings buffers and reduce their debt burden to cushion potential inflationary pressures.
He said crude oil prices were closely linked to other commodity prices, with elevated fuel prices often translating into higher transportation, electricity and food costs.
These rising costs could further erode household purchasing power and add to the overall cost of living.
“In the environment of volatile prices, consumers should practise strategic spending. This includes increasing the savings buffer, avoiding unnecessary spending, and pare down debt burden,” he said.
He added that prudent financial management and prioritising essential expenditure would help households build greater financial resilience against potential increases in living costs.
-- BERNAMA