If you’ve been feeling like your money doesn’t go as far as it used to, you’re not alone. Over the past decade, inflation has crept up on us, silently raising the cost of everyday items.
From groceries to housing, Malaysians have seen prices climb steadily over the years. But, while we may know that inflation has raised prices, how much more are we really paying over the last 10 years?
How Much Have Prices Increased In Malaysia?
Over the last decade, Malaysia’s inflation has been on a bit of a rollercoaster. We saw a significant jump in 2017 due to soaring oil prices, and in 2020, inflation dipped as the pandemic slowed everything down. Since then, things have picked up again with supply chain disruptions and global recovery pushing prices higher – close to touching the 5% mark at certain points.
Fast forward to August 2024, Malaysia’s inflation rate has cooled down to 1.9. Slower inflation means that prices are still increasing though.
The CPI bumped up to 133.2 from 130.7 last year. Thanks to more stable costs in housing and utilities (+3.1%) and food (+1.6%). On the flip side, transportation costs inched up by 1.3%, and dining out is still a little pricey, with restaurants charging about 3.2% more.
Read Also: What Is Malaysia’s New Minimum Wage, And How Will It Affect Employees And Employers?
Malaysia Consumer Price Index (CPI) 2014-2024
Source: CEIC
What Items Have Experienced the Most Inflation?
While overall inflation may have moderated, its effects may not be uniformly felt across daily expenses for Malaysians. Some household items have seen a more significant price increase than others.
Food & Beverages
The food that you eat is one of the hardest-hit categories. Over the past decade, the prices of essential food items like vegetables, meat, and rice have increased by an average of 30%-40%. Rising global food prices, supply chain disruptions, and local weather patterns have all played a part. The price of fresh chicken alone has gone up by 50% since 2014!
The government is considering ending subsidies for chicken eggs (grades A, B, and C), which could save them around RM100 million a month. Agriculture and Food Security Minister, Mat Sabu (Datuk Seri Mohamad Sabu), mentioned that the money saved could be better spent on other important areas of the agro-food sector. Since February 2022, over RM3 billion has been spent on subsidies for chicken and eggs. Last year, the chicken subsidy was removed and since then, the supply and prices have stabilized. Could the same happen with eggs? We shall wait and see!
Housing & Utilities
The house price index in Malaysia hit 216.5 in 2023, more than doubling since 2010, showing that housing prices have been rising steadily every year since 2014. After being hit hard by COVID-19, the real estate market started recovering in 2022, with residential transactions growing by 22%.
As of 2024, despite a slower inflation rate, house prices remain high, averaging RM450,000 in 2022, an increase of RM12,000 from the previous year. Most potential homebuyers, particularly in Kuala Lumpur, are seeking properties under RM250,000, putting pressure on the government to expand affordable housing schemes for lower and middle-income groups as the demand for budget-friendly homes continues to rise.
Price index of houses in Malaysia from 2014 to 2023
Source: Statista
Read Also: 5 Brand New Terrace Homes Under RM1.5Million You Can Buy In Johor As A Foreigner
Transportation
Fuel prices have been pretty unpredictable of late, especially after the government removed diesel subsidies on 1 June 2024. This tough decision was made to tackle a massive diesel subsidy bill that skyrocketed from RM1.4 billion in 2019 to RM14.3 billion in 2023 and to deal with issues like diesel smuggling. As a result, diesel prices in Peninsular Malaysia surged by 56%, jumping from RM2.15 to RM3.35, which is still a bargain compared to other Southeast Asian countries.
In Budget 2025 petrol price subsidy have also been removed for certain households, to help meet budget targets.
Read Also: Malaysia Budget 2025: 5 Things That Will Financially Impact Malaysians The Most
What The Stronger Ringgit Means For Inflation And Your Wallet?
Recently, the Malaysian Ringgit has been on a strong upward trajectory, becoming one of the best-performing currencies globally. As of early October 2024, the Ringgit appreciated by 14.4% against the USD in the third quarter, reaching about RM4.12 against the USD. This surge has been driven by several factors, including a reduction in interest rates by the US Federal Reserve and improved investor confidence in Malaysia’s economic outlook.
However, it’s worth noting that while a stronger Ringgit benefits consumers through lower prices on imports, it could pose challenges for local exporters. If they face difficulties competing with cheaper foreign goods, this could lead to a reduction in local production and, potentially, job losses. So, while your wallet might feel a bit thicker now, it’s essential to consider the broader economic picture.
Overall, if the Ringgit continues to strengthen, you can expect to see some positive changes in your shopping experience, from lower prices on imported goods to potentially stabilizing costs for everyday items.
While inflation might seem like a beast we can’t tame, managing your finances is totally in your hands! Start by tracking your spending, budgeting apps can make this super easy. Look for unnecessary expenses you can cut, like dining out less or switching to a cheaper mobile plan. Investing in assets that can outpace inflation, such as stocks or real estate, is another smart move. And don’t forget to keep yourself informed about inflation trends, staying in the loop helps you make smarter choices for your future!
Read Also: What Does The Appreciating Ringgit Means To Malaysians Working In Singapore?
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