Yesterday, Lim had said the rise in the inflation rate was specific to countries facing a socio-economic crisis caused by autocratic governments with entrenched corruption.

But Hoo Ke Ping said if higher inflation was a sign of corruption and mismanagement, then inflation indicators in Penang – such as the increase in rentals and property prices – would indicate that there was also corruption and mismanagement in Penang.

Last March, Malay Mail Online reported that rentals in George Town’s heritage shophouses had skyrocketed, with some tenants receiving notices of 200-300% hikes in monthly rentals.

“But, of course, we know that factors such as supply and demand, and the scarcity of land also affect property prices,” Hoo said.

“Similarly, when we talk about increasing inflation rates, we can’t simply discount the correlation between global oil prices and inflation rates.”

Lim had said that the Barisan Nasional (BN) federal government couldn’t “simplistically” attribute the rise in inflation to the increase in petrol prices.

The Penang chief minister said BN had given the same explanation when the price of oil fell to US$30 per barrel and the ringgit was hovering at RM4-RM4.10 to the US dollar.

He then pointed out that the oil price was now at US$50 per barrel, but instead of rising, the ringgit value had fallen to RM4.45 to the US dollar.

Hoo said the plausible explanation for this was that currency traders probably felt Malaysia would once again implement capital flight controls again – as it did during the 1997/1998 Asian Financial Crisis.

“You have to look at the external factors, too. After Donald Trump won the United States presidential election, it spooked the market and some currencies were affected.

“After that, Bank Negara Malaysia disallowed currency trading but it didn’t stop capital outflow in the form of remittances.

“So there’s a free flow of capital outflow from Malaysia, despite rising outflow due to the ‘Trump effect’.”

Buoyed by the “Trump effect”, Hoo said global markets believe US stocks and the US dollar would outperform the global market. So a lot of capital is going back to the US.

This, he said, meant regional currencies and bonds, including those from Malaysia, were being sold in favour of American bonds and stocks, and this affected commodity-based economies like Malaysia.

“When petrol prices were at their lowest, the ‘Trump factor’ wasn’t there.

“So we can’t be so simplistic in our analysis.”

Guan Eng links higher inflation to corruption, mismanagement