The Writings on The Wall

Via Reuters, oil price hit a record $74 a barrel Wednesday reacting to fears of Iran's intensifying dispute with the West. Aisehman asks, "How much can the Government tahan without raising the price of petrol at the pump this year?"

In an earlier entry, he had warned;

"I think we will soon, if not now, need to know whether the Government will stand by its vow not to raise petrol prices again this year.

I'm thinking the Government will probably stick with the "freeze", but if crude oil prices go even higher and stay high, that would only mean that next year, we're gonna be hit by A BIG, FAT PRICE HIKE.

Remember how upset we were when they dumped the 30sen increase on our laps? Wouldn't it have been better if they did it in increments?

So if it were me and I needed to do it, this would be ONE PROMISE I WOULD BREAK." ... Note that the emphasis are mine.

Meanwhile, The Star reported today that higher transport costs (18%), consumer prices (3.7%) and food & non-alcoholic beverages (3.5%) pushed the consumer inflation to 4.8% in March, the highest level in 6 year;

"Malaysia's inflation rate accelerated by 4.8% in March from the same month last year after the Government reduced its subsidy for fuel prices. The Government had reduced fuel subsidies, which resulted in prices rising as much as 23% at the end of February."

The rise in the March CPI had further widened the gap between fixed deposit rates of about just above 3%, which means there was a negative interest rate relative to inflation. This could lead Bank Negara to raise interest rates (again) to cool inflation and restore a positive level of deposit rates;

"Meanwhile, a Bloomberg report quoted an economist as saying the rise in inflation may prompt Bank Negara to increase borrowing costs, possibly as soon as next month."

And just last week, Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik dropped a clear hint that Malaysians would have to be prepared to pay more for electricity in the near future;

"We are going another round to the people to explain why TNB's long waiting tariff increase has to come but we are also giving the assurance that the lower income group would not be affected," he told reporters after officiating the PIKOM PC Fair 2006 at the KLCC building here, Friday.

Arrgh, do you not see the writings on the wall? Does it not appear inevitable that prices are set to increase some more?

Stealing a line from Aisehman, ARE YOU soaking wet now? Well, the rain hasn't stopped yet.

Just go get yourself a raincoat or an umbrella now if you haven't got one yet!