Professor of Economics at Sunway University Business School Yeah Kim Leng said the government’s calculation for petrol prices was unclear.
Speaking to FMT, he said with petrol prices expected to rise in the coming year, any unexpected increase in prices for businesses might be reflected in retail prices, and this would be passed on to consumers.
Yeah was commenting on reactions in the social media to the latest increase in petrol and diesel prices by 15 sen.
Many netizens lamented that when fuel prices went down, the decrease was minimal, but when it went up, the increase was substantial.
At present, the prices of fuel are said to be calculated using a managed float system, which takes into account the monthly average price of crude oil, among others.
Yeah said: “When businesses cannot forecast the prices of fuel based on global oil prices, they may have to have a buffer allocation to mitigate any increase for each month.
“However, if they knew the method of calculation, they could make clearer projections and estimations, and the funds meant for mitigating increases could be used for other purposes.”
Independent economist Azrul Azwar Ahmad Tajudin said when the public was unsure how the fuel prices were calculated and saw increases in fuel prices, they would be wary of impending price hikes.
“Society nowadays is more discerning, and when they see smaller decreases and higher increase, it may raise suspicion,” he said,
“This could affect spending patterns and businesses will also be affected as they may decide to reassess any plan for expansion or making investments due to lower consumer confidence,” he told FMT.
Therefore, Azrul said, it was important for the government to reveal its exact method of calculating fuel prices, in the interest of transparency and to make it clear for businesses and consumers.
In the past, PKR MP Rafizi Ramli had urged Putrajaya to publish its references for global prices using the Means of Platts Singapore (MOPS) price list and all other costs in calculating fuel prices.