Govt aware of SST hike impact on cost of living, mechanism in place

New Straits Times

5 days ago

KUALA LUMPUR: The government was fully prepared for the potential impact of the expanded Sales and Service Tax (SST) on the cost of living, particularly food inflation, the Dewan Rakyat heard today.
Deputy Finance Minister Lim Hui Ying said the Finance Ministry had anticipated inflationary pressures from the SST expansion and had put in place mechanisms to manage its effects.
"Indeed, when we implemented the expansion of the SST, we were prepared for any impact and yes, we are aware that food and living costs would rise," she said during the question-and-answer session in the Dewan Rakyat today.
Lim was responding to a supplementary question from Datuk Seri Hamzah Zainudin (PN–Larut), who asked about the government's strategies to reduce food prices following the SST expansion.
Hamzah, who is also the Opposition Leader, said that while the overall inflation rate of 1.1 per cent in June may appear low, rising food prices were putting real pressure on the public.
He also cited state-level food inflation data, which showed increases of 3.3 per cent in Negri Sembilan, 3.1 per cent in Selangor, and 2.9 per cent in Putrajaya.
Hamzah also pointed out that the price of mackerel has increased from RM14.80 per kilogram before the SST hike to RM16 in Kuala Lumpur.
Commenting further, Lim acknowledged that food inflation remained higher than the national average, even though the overall inflation rate for June 2025 stood at 1.1 per cent.
"Certain areas, such as Negri Sembilan, may have recorded higher rates. But based on the overall data we have, the average of food inflation is 2.1 per cent in June and it stands at 2.4 per cent from January to June," she said.
She also reiterated that the expanded SST was a targeted measure and that the Domestic Trade and Cost of Living Ministry is actively monitoring food prices to ensure they remain under control.
"We do not want food prices, especially for necessities, to increase uncontrollably.
"As such, the ministry will continue to monitor prices from time to time to ensure that the cost of living does not rise significantly," she said.
Malaysia's inflation rose at a slower pace of 1.1 per cent in June 2025, with the index standing at 134.5 points compared to 133.0 in the same month last year, according to the Department of Statistics Malaysia (DoSM).
DoSM's June 2025 Consumer Price Index (CPI) release stated moderation was also reflected in the Producer Price Index (PPI) for local production, which declined by 3.6 per cent in May 2025.
Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said 59.2 per cent of items, or 339 out of 573, recorded price increases.
Nonetheless, of this total, 329 items (97.1 per cent) recorded an increase of less than or equal to 10 per cent, while only 10 items posted increases exceeding 10 per cent in June 2025.
The remaining 192 items (33.5 per cent) recorded a decline, and 42 items remained unchanged, he said.
DoSM said the food and beverages group, which contributes 29.8 per cent to the total CPI, rose 2.1 per cent in June 2025.
Meanwhile, responding to Hamzah's original question on the government's strategy to reduce the burden of the people's cost of living, Lim said efforts to raise the economic floor and ensure improved welfare for the majority of the population despite rising living costs will be continued.
Among the initiatives, she said, include the Rahmah Cash Aid and Basic Rahmah Aid, which total RM13 billion in 2025 compared to RM10 billion previously.