Household consumption, purchasing power decline 16.7 percent in a decade

 

Malaysia’s Consumer Price Index (CPI) recorded 83.3 percent, a decline of 16.7 percent over a decade, the Department of Statistics Malaysia (DoSM) said.

Chief statistician Mohd Uzir Mahidin said within the 12 main groups, two groups of goods and services registered purchasing power of more than 100.0 percent, namely communication (102.6 percent) and clothing and footwear (107 percent).

"This illustrates that households were able to enjoy Communication services, Clothing and Footwear at cheaper prices as compared to 10 years ago.

"Meanwhile, the alcoholic beverages and tobacco group recorded the highest decrease in purchasing power by 40.6 percent. This is followed by food and beverages (25.8 percent) and restaurants and hotels (24.5 percent)," he said.

According to Uzir, the inflation for urban areas in 2020 rose more than the inflation for rural areas, which means that changes in the price of goods in the urban areas were faster than the rural areas.

He said the inflation gap between urban and rural areas widened since 2014 and continued to increase up to 3.4 index points in 2020.

At the same time, purchasing power by the main group in urban areas was lower (17.1 percent) than in rural areas (14.7 percent).

"The main groups that recorded lower purchasing power in urban areas were health (20.1 percent), restaurants and hotels (25.3 percent), Food and Beverages (27 percent) and alcoholic beverages and tobacco (39.8 percent).

"These groups also contributed to the lower purchasing power in rural areas at 16.9 percent, 20.1 percent, 21.6 percent, and 42.7 percent, respectively," said Uzir.

Commenting further on the performance of inflation in 2020, the chief statistician said the Covid-19 pandemic had indirectly reflected on the inflation rate as Malaysia recorded a negative inflation of 1.2 percent.

Among the most affected groups were transport (-10.0 percent), followed by housing, water, electricity, gas and other fuels (-1.7 percent) and clothing and footwear (-0.8 percent).

However, miscellaneous goods and services increased 2.7 percent followed by food and beverages (1.3 percent) and communication (1.1 percent).

The index for all states decreased between negative 0.6 percent to negative 1.9 percent in 2020 as compared to 2019, with Malacca recording the highest decrease at -1.9 percent, followed by Sabah and the Federal Territory of Labuan (-1.9 percent), Kedah and Perlis (-1.8 percent) and Sarawak (-1.8 percent).

Although the inflation in 2020 was negative, the inflation for food and beverages remained in the positive position (increment).

The inflation of this group registered 1.3 percent. This was the lowest inflation rate recorded in a decade while the highest inflation for this group was in 2011 at 4.8 percent.

In general, Uzir said 2020 had changed the household spending landscape with households prioritising on food spending and basic necessities.

This report also highlights the findings for essential and non-essential groups.

He added, “During the period from 2011 to 2020, Malaysia's inflation was heavily influenced by inflation of essential groups. In 2020, the decline in essential group inflation at -1.9 percent will be more significant than the overall inflation of -1.2 percent."

- Bernama