Price hikes may force Bruneians to restrain spending
BANDAR SERI BEGAWAN
With incomes unchanged, steady rise in prices of consumer goods will be bad for business
RISING prices of consumer goods are beginning to creep into household budgets in Brunei and, as income stays generally unchanged, some will be forced to tighten their purse strings, according to economists.
Inflation has not shown signs it should worry policymakers, but if economic circumstances compel more Bruneians to cut costs, businesses will have to deal with consumers becoming increasingly prudent in their spending.
"Inflation is going up, it is discussed and acknowledged ... I do not think it is worrying but if it does continue people could start considering cutting costs," Allen Lai, chief executive officer of Asia Inc, said in an interview with The Brunei Times.
Likewise, Dr Roger Lawrey, deputy dean of the UBD Faculty of Business, Economics and Policy Studies, said in a separate interview that economic wellbeing could be at risk due to high prices of consumer goods.
"Prices are going up, income is not going up. Consumers may find themselves considerably worse-off," Dr Lawrey told The Brunei Times.
"It is an issue in Brunei, an issue we have raised in our work. You're looking at the subsidised system of energy maybe and other things ... but when income is not changing ... economic welfare is reduced."
He explained that when consumers buy less goods due to exceptionally rising prices, it could lead to less production in the sultanate and this can have consequences on Brunei's future economic activity.
"When prices of essentials go up, we would have less discretionary income to spend, this could impact the business community," Dr Lawrey said.
The level of price increases and its effects in Brunei, however, have not reached a point where it leads to "disharmony causing the quality of life to reduce significantly", Allen said.
"We are not there yet, I don't think we will be there. It's just that prices are going up a bit .. for the areas where the government does not subsidise."
He continued: "Prices are going up, that can be reflected on necessities such as flour, salt, but products such as oil and gas, rice are subsidised, so we don't really feel it. But if it continues to rise, the lower-income level will continue to feel it."
The government, he said, is giving a proactive approach towards people who are most exposed and at risk of being affected by costs of necessities, such as pensioners and low-income families.
Allen and Dr Lawrey did not propose addressing the situation by raising incomes.
Asia Inc's Allen, however, pointed out the need to take a closer look at price levels in the sultanate and retaining highly skilled manpower.
"It has been getting more expensive ... There is a suction into the Middle East and other oil-producing countries, in terms of infrastructure and human resources. Even our locals are getting tapped," he said.
Prices of goods and services in Brunei increased 0.6 per cent in November last year.
The Brunei Times