Focus View
Strengthening ringgit should benefit consumers
FocusM team | 24 Nov 2017 00:30
The weakening of the ringgit in recent years has been a blot on the country’s economy. It has also been the bane of Malaysians, who have had to bear the burden of rising prices for a host of goods and services.
However, the recent strengthening of the ringgit, if sustained, offers a ray of hope for the people to enjoy the positive impact of a strong local currency. 

It is good for those who like to travel abroad. Parents who send their children to study abroad can lock in a strong ringgit vis-à-vis foreign currencies. Similarly, consumers who are into imported products should expect some cost savings. 

Nevertheless, for Malaysians spending domestically, what matters most is whether the strong ringgit will translate into lower prices for goods and services, especially for local companies and suppliers which source imported raw materials and inputs for local production. 

Bear in mind that the pass-through effect comes with a time lag and as always, one should expect some price stickiness. The cumulative impact of the weak ringgit over the last four years has been partly blamed for inflation and high cost of living. Inflation and a weak ringgit affect a household’s disposable income.

The ringgit has strengthened since hitting RM4.48 to the US dollar at the end of last year. Oddly, while prices of goods should generally be lower, the inflation rate has been increasing. From 3.2% in January, the consumer price index (CPI) has risen to 4.3% in September, year on year. 

It would appear the change in the ringgit’s fortunes for the better has not reversed matters. The stronger ringgit has not led to cheaper goods and services in many instances. On the contrary, inflation is spiking. So, are the people being short-changed?

The authorities must ensure the people are the main beneficiary of a stronger ringgit. They must crack the whip so that unscrupulous traders pass on the benefits to consumers via cheaper goods. Otherwise inflation may continue to spiral and millions of households will continue to struggle with the debilitating effects of rising prices.