The price of goods in the market is actually determined by many interrelated factors, not just the value of the ringgit. Many people think that when the ringgit strengthens, the price of all goods will continue to fall. Crypto Market
However, in reality, price changes are more complex because they involve global costs, domestic costs, and the way a business manages their operations.
Among the main factors that affect prices are the cost of raw materials, electricity costs, transportation costs, employee salary costs, and even premises rent. All of these are basic components in determining the final price of a product.
Although a stronger ringgit can help reduce import costs, many other costs still remain high or continue to increase over time. Therefore, the effect of a price decrease does not automatically occur on all goods.
In addition, changes in currency values do not immediately affect prices in the market. This is because most importers have bought stocks in advance, perhaps several weeks or months before they are sold. If the stock is bought when the ringgit is still weak, then the cost is already "locked" at the old price. Crypto Market
So the goods that arrive at the store today are not actually purchased at the current ringgit rate, causing prices to take time to change.
It is also important to understand that not all goods depend on imports. Many daily necessities such as local vegetables, chicken, and eggs are more influenced by the cost of production in the country.
For example, the cost of animal feed, farm worker wages, local logistics costs, as well as the weather and agricultural produce. Therefore, even if the ringgit strengthens, the impact on local goods is not as great as that of imported goods.
At the same time, the price of goods is also influenced by business strategy. Some companies do not immediately lower prices even though costs have decreased because they need to cover old costs, offset previous losses, or maintain the company's financial stability.
Some also choose to maintain profit margins to ensure that their operations remain strong in the long term.
In addition, the global supply chain also plays a key role. Disruptions in transportation, world oil prices, and geopolitical situations can cause costs to rise even if other factors are stable.
All of this ultimately affects the price paid by consumers at the end of the day.
In conclusion, a stronger ringgit is indeed good news as it can help reduce import costs and stabilise inflation in the long term. However, it is not a “magic button” that can instantly lower all prices.
The prices of goods are determined by a combination of many factors including global costs, local costs, supply chains and business strategies, which means that price changes take time to be truly felt by consumers.
