SHAH ALAM, 11 Jan: The impact of the increase in price of goods, which causes the cost of living to go up, would result in many people facing chronic debt problems.

The Department Head for Resource Management and Consumer Studies, Human Ecology Faculty at Universiti Putra Malaysia (UPM), Dr Mohamad Fazli Sabri, said that this will happen because the people would incur debts to cover the lack of income due to the increase in price of goods.

He said that this increase would certainly cause urban consumers, especially among the low and middle income group (urban poor) to be burdened.

“The income received is needed to be spent to cover current expenses, which is increasing, and would cause a lack of income to happen.

“Those who cannot afford are forced to figure out how existing debts or loans can be settled,” he said, quoted from Sinar Harian.

He said that the impact from this is that there would be consumers who will take the easy way by obtaining loans from illegal sources such loans companies that are illegal or do not have licences to supplement the lack or inadequacy of income.

“In fact, there would be some who are willing to owe loan sharks. This will make them vulnerable to security threats against themselves and their families,” he said.

Previously, the Chief Economist at RAM Holdings, Dee Yeah Kim Leng, said that the number of people that will go bankrupt due to the cut in sugar and oil subsidies, as well as the increase in electricity tariff and other household items, would directly increase the cost of living.

In a recent report by the Singaporean newspaper, the Straits Times, there are over 60 people who are declared bankrupt every day, as of September, an increase from 53 a day in 2012.