DESPITE the two recent reductions in fuel pump prices amounting to a total of 25 sen, there has hardly been any response from retailers to correspondingly reduce the prices of goods, which they raised after the 70-sen rise in fuel prices, often out of proportion to the cost of fuel.

Many senior citizens who have lost their earning capacity depend largely on the interest earned from their fixed deposit (FD) accounts in commercial banks.

With the current inflation rate running at 8.5 per cent, not only is the 3.5 per cent interest earned from FDs eaten up by inflation, the value of the capital retained is also diminished through a reduction in purchasing power.

It does not make sense to keep money in FD accounts and allow its value to depreciate.

It makes more sense to buy and stock up on non-perishable consumer goods whose prices are likely to spiral further due to increasing demand.

Raising the interest rate for FDs will counter the economically crippling effects of inflation.

This would mop up excess money in circulation. With a reduction in excessive spending, and a relatively reduced demand for goods, retailers would be forced to cut down on excessive and unjustified profiteering.

M. GANESHADEVA, Kuala Lumpur

Source: NST – October 3, 2008