PETALING JAYA: Consumers can expect prices of goods to drop by the year-end, bringing a bit more cheer during the festive season as a stronger ringgit makes it less costly for businesses to stock up on inventories.
Several trade associations said the savings would be passed through to consumers at the earliest by the end of the year but prices would definitely be lower by Chinese New Year.
The ringgit has been strengthening throughout the year in tandem with other currencies in the region and was at the highest level this year when it settled at 3.08 to the US dollar last Friday.
While it has weakened recently, currency strategists expect the ringgit to trade at between 3.10 and 3.15 to the greenback for the rest of the year.
An economist with a local investment bank pointed out that the ringgit could have strengthened even further if there had been no interventions over the past few months.
Malaysian Retailer-Chains Association president Datuk Tay Sim Kim told StarBiz that with the ringgit’s current strength, consumers could expect prices to drop in two to three months.
“This is assuming that most businesses have an average 60 days’ worth of stock, which will mean that by the end of the year or latest by Chinese New Year, prices will be lower,” he said.
The Association of the Computer and Multimedia Industry president Shaifubahrim Saleh said there could be a price advantage as inventories depleted and businesses stocked up with cheaper imported products.
“We may see over the next few months some lowering in the prices but this will really depend on the market and how aggressive retailers are,” he said, adding that margins in the industry were already low.
Shaifubahrim said the other factor determining whether business could meet consumer expectations of lower prices was in the inventory cycle.
“There may be a disconnect between the strengthening ringgit and when businesses order their stocks, so there may not be any savings passed through so soon,” he said.
