1.0 Introduction
1.1 Background of study
Recently, the volatility of fuel price fluctuates aggressively because of the global issues likes rumors on the limited fuel in United State. Minister Datuk Seri Abdullah Ahmad Badawi said that Malaysia will face the greatest challenge in the economy as a result of the rising global fuel prices. Further, rising fuel prices and uncertainty caused by external factors make it difficult for any nation to fully shield its citizens from hardship. There will be some measurable impact on the broad sectors of the economy (transportation and logistic industry, food retailers, petty traders, auto, construction, consumer, media, property and toll operators).
On the top of that, rising fuel price will give wider implication towards middle income groups. According to Ainshah, O., Salmi, R & Osman, CB (2006) income can be divided into three categories which are high income (more than RM 3500), middle income (range between RM 1500 to RM 3500) and lower income (less than RM 1500). They faced burden with the higher cost of living and also faced higher price of necessity product. Normally, the impacts of rising fuel prices will burden the lower income group. However, in the current situation of rising fuel prices, not only lower income group suffer the implication but the middle income group surprisingly suffer the burden also.
1.1.1 Fact on Price of Oil before and after Price Hike Crisis
Prime Minister Datuk Seri Abdullah Ahmad Badawi on Wednesday June 4, 2008 in Kuala Lumpur had declared that the new price for petrol is RM2.70 a liter. The price goes up by 78sen from the current RM1.92, a hike of 40%. Other than that, the price of diesel also has been announced that would be increased by RM1 to RM2.85. The highest magnitude on the changes of oil price had received many reactions from our society. Even though the increasing actually was caused by the global crisis but some of them think that it is still not relevant for government to raise the price too high because petrol is one of the subsidized items.
As we known from the statistic of oil price hike, absolutely this year is the highest increasing amount which the last few years the oil prices normally increase only by 30sen on average. Moreover, the Prime Minister also announced about the increasing of electricity rate by 18% for homes and 26% for business users. This phenomena which called as an economic forces that we need to confront not only among household even in the industries where firms need to develop strategies to avoid or minimize the impact of this threats. Impact of this oil price hike will affect increasing in other things prices. That is what really happened by today where some of parties have taken advantages to raise their price to the consumers. However, after comparing with the current global market price periodically, on Monday August 25, 2008 Datuk Seri Abdullah Ahmad Badawi[1] has announced that government had decided to reduce the petrol price to RM2.55 to RM2.40 per liter and diesel price become RM2.50 per liter.
1.2 Statement of the problem
The global fuel price has been increasing in quite a big number nowadays. This increasing of global fuel prices will give wider impacts towards the other country and every country will suffer the burden. The price of pump price of fuel has raised to a point that threatens the livelihood of most the Malaysian surprisingly to the middle income group.
Given the situation, increasing of fuel prices will lead to the inflation and that means a higher cost of living to the Malaysian. It involves literally everything from teh-tarik, roti-canai, mee-mamak, children’s bus-fare, electricity tariff and others. Unfortunately, the group most affected by the fuel and power increase is the middle class because of higher cost of living and without salaries increase to the worker.
1.3 Purposes of the study
Given the uprising global fuel prices nowadays, every nation will facing with the extreme impacts to the economy. Malaysia also faced with the current situation and people are facing with higher cost of living. Apart from that, the middle income groups are faced with great hardship as the price of necessities product had drastically rising.
In response to this possible national concern, we would like to investigate the issue further. The purpose of our study described in this research report was to assess the current public knowledge on the impacts from rising fuel price towards middle income group and to explore the broader action taken from the government and individual prospect to overcome this situation.
1.4 Objectives of the study
The objectives of this study are:
1.4.1 To identify the impact of rising fuel price towards middle income group
1.4.2 To describe the action that can be taken by the middle income group to faced the
1.1 Background of study
Recently, the volatility of fuel price fluctuates aggressively because of the global issues likes rumors on the limited fuel in United State. Minister Datuk Seri Abdullah Ahmad Badawi said that Malaysia will face the greatest challenge in the economy as a result of the rising global fuel prices. Further, rising fuel prices and uncertainty caused by external factors make it difficult for any nation to fully shield its citizens from hardship. There will be some measurable impact on the broad sectors of the economy (transportation and logistic industry, food retailers, petty traders, auto, construction, consumer, media, property and toll operators).
On the top of that, rising fuel price will give wider implication towards middle income groups. According to Ainshah, O., Salmi, R & Osman, CB (2006) income can be divided into three categories which are high income (more than RM 3500), middle income (range between RM 1500 to RM 3500) and lower income (less than RM 1500). They faced burden with the higher cost of living and also faced higher price of necessity product. Normally, the impacts of rising fuel prices will burden the lower income group. However, in the current situation of rising fuel prices, not only lower income group suffer the implication but the middle income group surprisingly suffer the burden also.
1.1.1 Fact on Price of Oil before and after Price Hike Crisis
Prime Minister Datuk Seri Abdullah Ahmad Badawi on Wednesday June 4, 2008 in Kuala Lumpur had declared that the new price for petrol is RM2.70 a liter. The price goes up by 78sen from the current RM1.92, a hike of 40%. Other than that, the price of diesel also has been announced that would be increased by RM1 to RM2.85. The highest magnitude on the changes of oil price had received many reactions from our society. Even though the increasing actually was caused by the global crisis but some of them think that it is still not relevant for government to raise the price too high because petrol is one of the subsidized items.
As we known from the statistic of oil price hike, absolutely this year is the highest increasing amount which the last few years the oil prices normally increase only by 30sen on average. Moreover, the Prime Minister also announced about the increasing of electricity rate by 18% for homes and 26% for business users. This phenomena which called as an economic forces that we need to confront not only among household even in the industries where firms need to develop strategies to avoid or minimize the impact of this threats. Impact of this oil price hike will affect increasing in other things prices. That is what really happened by today where some of parties have taken advantages to raise their price to the consumers. However, after comparing with the current global market price periodically, on Monday August 25, 2008 Datuk Seri Abdullah Ahmad Badawi[1] has announced that government had decided to reduce the petrol price to RM2.55 to RM2.40 per liter and diesel price become RM2.50 per liter.
1.2 Statement of the problem
The global fuel price has been increasing in quite a big number nowadays. This increasing of global fuel prices will give wider impacts towards the other country and every country will suffer the burden. The price of pump price of fuel has raised to a point that threatens the livelihood of most the Malaysian surprisingly to the middle income group.
Given the situation, increasing of fuel prices will lead to the inflation and that means a higher cost of living to the Malaysian. It involves literally everything from teh-tarik, roti-canai, mee-mamak, children’s bus-fare, electricity tariff and others. Unfortunately, the group most affected by the fuel and power increase is the middle class because of higher cost of living and without salaries increase to the worker.
1.3 Purposes of the study
Given the uprising global fuel prices nowadays, every nation will facing with the extreme impacts to the economy. Malaysia also faced with the current situation and people are facing with higher cost of living. Apart from that, the middle income groups are faced with great hardship as the price of necessities product had drastically rising.
In response to this possible national concern, we would like to investigate the issue further. The purpose of our study described in this research report was to assess the current public knowledge on the impacts from rising fuel price towards middle income group and to explore the broader action taken from the government and individual prospect to overcome this situation.
1.4 Objectives of the study
The objectives of this study are:
1.4.1 To identify the impact of rising fuel price towards middle income group
1.4.2 To describe the action that can be taken by the middle income group to faced the
burden
1.4.3 To investigate the problems that will occur from the rising fuel price to the middle
1.4.3 To investigate the problems that will occur from the rising fuel price to the middle
income group.
1.5 Research Questions
1.5.1 What are the impacts of the rising fuel price towards middle income group?
1.5.2 What are the action taken to faces the increasing the fuel price?
1.5.3 What are the problems that occur because of the rising fuel price?
1.6 Significance of the study
Recently, the volatility of fuel price fluctuates aggressively and gives wider implications towards middle income groups. This current situation has a possibility to be reoccurring again in the future. Even though, this current problem arise now but the implication of this situation can be reuse in the future. With the information at hand, the findings of the study are very important to the people especially middle income people in order to be more prepared with the strategic action to face this situation if it happens again.
1.7 Scope of the study
Our scope of study involves the participation of 50 respondents in Melaka Central. The respondents who are gain income range between RM1500 to RM3500 per month which randomly selected by the research team themselves. The data collected via questionnaire was distributed from end of August to 7 September this year. We also used SPSS system to analyze the data that been collected from our distributed questionnaires.
[1] Berita Harian Online (2008).Retrieved August 25, 2008, from http://http://www.bharian.com/.
[2] Car Information Center (2008).Retrieved August 25, 2008, from http://http://www.car.com/.
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