Saturday, September 27, 2008

Inflation and standard of living

Reading this news on Malaysia inflation rate has jumped to a 27-year high of 8.5 percent in August and wondering how does inflation impact our life and how is impact life of migrant worker?

Surely the inflation will hurt our standard of living because we have to pay more and more for the same goods and services. If our income doesn't increase at the same rate as inflation, we will find our standard of living declining even though we are making more. Also, inflation doesn't impact everything equally, so that some things (such as gas prices) can double while other things (our home) may lose value. For worker who earn monthly income if the wages not increase according to the costs of living , standard of living is most likely to be affected .

For migrant workers who is actually earn income lower than local worker or not even get pay after the reduction of all the employment fees &charges .When migrant workers did not get fair wages and how could they be able to afford their basic needs..

Inflation jumps to 27-year high Sep 24, 08 5:16pm

The inflation rate has jumped to a 27-year high of 8.5 percent in August, driven by the escalating cost of food and fuel, according to official data released today.

"The result was slightly higher than expected but the central Bank Negara would not raise interest rates to ensure growth," said Wan Suhaimi Saidi, an economist with Kenanga Investment Bank.

"It is slightly above my expectation. I was looking at 8.4 percent. I don't think the government will increase the key interest rates. It will be maintained at 3.50 percent till the year-end to support growth," he told AFP.

The Department of Statistics revised downwards the inflation figure for July to 8.3 percent. It had earlier stated that the figure was 8.5 percent.

It said the cost of food and non-alcoholic drinks rose 11.7 percent in August compared to a year ago. The high inflation is already hurting consumers with many Malaysians cutting down on their food bill.

"The increase (in inflation for August) was shown in the selected main groups, namely food and non-alcoholic," it said in a statement.

Escalating food, transport prices

The August data showed escalating prices in most categories, including transport which jumped 21.8 percent, and restaurants and hotels which rose 6.5 percent.

The government hiked the fuel price by 41 percent in June, in a move to rein in the ballooning cost of subsidies but it has indicated prices could be lowered soon.

High inflation was one of the factors that led to an unprecedented humiliation at March general elections for the ruling coalition, which lost five states and a third of parliamentary seats.

Bank Negara has said it expects inflation to moderate in the second half of 2008 as economic growth is likely to slow down.

Shahrir: Inflation to remain high

After releasing August's Consumer Price Index (CPI), Domestic Trade and Consumer Affairs Minister Shahrir Samad said he does not expect September's inflation to be much lower.

"Although, the full effects of the petrol price reductions in August and now have not been fully factored in yet, September CPI may not be much lower.

"The lower petrol prices is expected to be offset by the increase spending during Hari Raya holidays and the 30 percent surcharge on public transportation," said Shahrir.

But the minister does expect the CPI to have peaked.

On a positive note, Shahrir said that inflation seems to have stabilised as the month-to-month increase was only 0.2 percent. However, overall inflation for the year is expected to hover around 4.8 percent.

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