Sunday, 3 January 2010

Sugar and coffee price relationship

The sugar price in Malaysia is set to be increased after government annouced the reduced amount of subsidy. The international price of sugar has increased a lot, but not in malaysia, due to the subsidy.
Another reason cited was to discourage excessive sugar consumption which contribute to illnesses.

In my view, the reduce or even abolishment of sugar subsidy is good for the long run. Although subsidy keep the price low, it distort the supply and demand. This in term, create other problems. Malaysian consume so much sugar, I think one of the reason simply is cheap. You look at the teh tarik, how sweet it is, you would know. For the man on street, this is of course not a good news. Who would like the price hike?

The worst part is this news served as trigger point of coffee price increase. Why a small amount of increment would make coffee more expensive by 10 cents? This is not a common sense. However, the coffee shop owner would tell you beside sugar, this and that have increased, therefore they need to hike the price. What can the poor consumer do?

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