Cannot be right, right? Inflation for Malaysia is VERY LOW.
Sometimes, we are the reason prices go up too
I was just speaking to a few friends in front of the lift and we were talking about food prices.
Friend 1: The food prices are so expensive these days. They have just increased another RM1 just like that.
Friend 2: Yeah lah, inflation is real.
Me: Actually, it’s because we love delicious food. Truth is, there are cheaper similar food elsewhere BUT it’s not as delicious. So, people continue to buy from that delicious shop / stall, of course price increase is very likely. Imagine if only half of the people continue to flock to that delicious or famous stall, do we seriously think they will still increase their prices every year or more?
All of us laughed and yet deep down, I don’t think that will happen. People will still continue to accept that RM1 increase every year and complain about it but as usual, continue to buy it too. Cycle continues.
Okay, for the actual stats? Read on about inflation in Malaysia.
Article in nst.com.my The inflation rate for November stands at 1.5 per cent, marking the lowest point compared to the same period last year, which recorded 4.0 per cent inflation in November 2022, following a continuous declining trend since August 2022.
The inflation rate should be evaluated contextually, taking into account the current economic status. For instance, during the East Asian economic crisis of 1997/98, Malaysia experienced a sudden fall in the value of the ringgit, and inflation soared to 5.3 per cent in 1998. Inflation also spiked to 5.4 per cent in 2008 due to rising global food and fuel prices.
Conversely, during the Covid-19 pandemic crisis in 2020, business closures and movement restrictions caused a sudden drop in demand. The inflation rate fell to a negative level of -1.1 per cent in 2020.
The inflation rate also dropped to a low of 0.6 per cent in 2009, specifically due to contraction in global demand following the global financial crisis. In this context, inflation rates decrease are due to a marked reduction in demand.
Since 1990, the average inflation rate has been 2.6 per cent per year. Generally speaking, the inflation rate is positive, indicating that prices are continually increasing. It is only the rate of increase that changes. Please do read the article in full here: Article in nst.com.my
There are reasons why prices will go up
When the input costs increase, for example raw materials, then of course prices would have to move upwards. When logistics costs increase, for example petrol price which has increased due to some disruption in supply due to wars, then prices would have to move upwards. When production costs increase, maybe the people cost, the electricity cost, the water cost and more and then prices would also increase too. In a bad season, maybe the cost of produce will also increase too as there are lower supply but demand remains the same. The one paying highest price will get it.
For developers, if the land price is up, they either build more units to compensate for the loss in profit or they increase the price of the units. This is why similar sized units does not equal to similar price because one could have an extra 50% more units and that helps tremendously in lowering the prices. Just look at the ever higher floors for HDB flats in Singapore to understand why and how price increases can be slowed down or even maintained.
Or the ever smaller unit size in Hong Kong just so that the prices remain affordable to some working professionals.
Inflation will continue to happen. For now, it seems to have slowed down. This is good news for all of us. Remember to skip that shop which kept increasing prices and we still have to queue to enter the shop. We are not helping the situation actually.
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