Price Increases - That's Life You Dummy!

Those greedy hawkers?

Here's something you won't read in the newspapers - Hawkers have a RIGHT to increase their prices!. No, I am not a hawker myself, neither are any of my family members hawkers (therefore ruling out any conflict of interest), but I say it because it's true!

Lately there's been such a hoohah over the increase in fuel price, and the alleged 'profiteering' by the traders and hawkers around Malaysia. Frankly, I find all this a tad bit silly and I believe that it stems mainly from people with no understanding whatsoever of the economic situation in Malaysia, and the world at large.

Here it is plain and simple, 'hawkers and traders will increase their prices in the face of rising living expenses'. To say that there is no basis for a price increase just because petroleum does not form one of the main components of say, a bowl of asam laksa is just plain misguided.


But..but..a bowl of mee sooo expensive nowadays oh!



Here's a hypothetical situation - Imagine that the cost of vehicle and house ownership in Malaysia suddenly doubled due to the meddling of an evil foreigner (think George Bush, George Soros, George Clooney bla bla bla). Such an event would definitely send our CPI through the roof, causing everyone to feel the pinch.

Imagine now that you are a hawker peddling char kuey teow by the streets of KL, and you are faced with the prospect of having to fork out an additional RM2,000 a month to pay for your house and car. What would you do? Why, you would raise the prices of your goods of course. It's only logical right? Now imagine someone coming to you and telling you that you have no reason to raise prices because char kuey teow is made from, well, kuey teow, tau geh and oil; and not from little bits of houses and automobiles. You would be forgiven for wanting to smack the person on the head with a piece of balled up kuey teow.



This very same situation applies to everyone everywhere, irregardless of your occupation. Whethe you're a manager or an executive, rising oil prices translate into increased living expenses; which in turn results in the desire for a larger raise, bonus etc. Face it, when you ask for a raise, you're basically increasing the price of your product (your time, resources, efforts etc). Despite the differing nature of the 2 products I'm talking about here (intellectual vs physical), parallels can and should be drawn.


It's a little thing called inflation



Some of my more mathematically inclined readers might do some basic arithmetic and come up with the conclusion that by raising the prices of their food stuff by say, 10%, hawkers are making more than enough to offset the higher price of fuel.

You would be correct to say that, but you're not looking at the whole picture. You have to add inflation into the equation. Malaysia's inflation rate nationwide is calculated to be around 4% give or take a few points. Mind you, that's Malaysia as a whole (including all those ulu kampung areas). If you zoomed down to KL and PJ, the inflation rate is much much higher. Studies have shown it to be anywhere between 6-8%!

With that in mind, it would be logical to surmise that hawkers should raise their prices by around 8% every year in order to break even. The thing is, most of them don't. Many hawkers (the ones i frequent at least) have peddled their wares at the same prices for 2 to even 3 years now! For a hawker who sells a bowl of mee at RM3.50, it basically means that he is underselling his product by at least 60 cents. So even if he were to increase the price by say, 30 cents, it would still be nowhere near the actual, inflation adjusted value of that very same bowl of mee he sold 3 years ago.

Corporate people expect to have pay increments of at least 10-15% a year, yet cry foul if other people such as hawkers, traders and business people aspire for the same thing. Instead of venting our fury at the alleged 'greed' of other people, shouldn't we in fact be working harder in order to ensure that our rate of pay increases trumps that of inflation?