Mums, Don’t Panic: Inflation Is Not As Bad as You May Think

Most of us may have been conditioned through generations of upbringing to believe that inflation is bad. You'll find numerous unimaginative memes circulating social media around this time. Especially ones showing you the price of eggs in the year 1984 versus the price of eggs today. But that's just how the economy works. At the end of the day, inflation is the result of rising production costs. Whether that's from raw materials, man power, energy or a dozen other things that play a part in the manufacturing of goods and services. Don't get me wrong though, for a huge number of people, making ends meet on a day-to-day basis during this time can be a matter of life and death. But if you fall into the M40 and T20 income groups, then inflation probably won't make any massive changes to your current lifestyle. Yeah, you'll probably have to cut back on unnecessary expenses. But it isn't as bad as you might be thinking. For the low to middle-income mums out there, you may want to know all the cold hard facts before you really panic because of the recent inflation. So, are you ready? Let's dive in. Prices on the Rise Inflation is measured using the Consumer Price Index (CPI), which tracks the rise of prices in various industries and sectors. And as recent headlines have reported, Malaysia's current inflation rate is at 2.8% partly thanks to the high CPI of the food and beverages category. With an all-time record high of 5.2% increase since 2011, this is followed by transport (3.9% vs 3.0%), housing (1.2% vs 0.8%), recreation & culture (1.8% vs 1.3%), restaurants & hotels (3.7% vs 3.2%), miscellaneous goods & services (1.9% vs 1.8%), furnishings, household equipment and maintenance (2.9% vs 2.7%), and health (0.4% vs 0.2%). Economists have voiced their thoughts and opinions on the matter; but many are in agreement—the inflation really isn't that bad. Hard to believe, right? Keep reading to learn more. What the Experts Say According to economists Paolo Casadio and Geoffrey Williams, the cause of Malaysia's recent inflation is a well-studied phenomenon. The three main culprits include increase in global oil price, removal of the utilities' subsidies implemented in 2021, and supply-side constraints. However, the third reason is probably the one you're most familiar with as it's something that's been talked about most in recent news headlines. Experts blame the COVID-19 lockdowns of previous years for the current inflation of June 2022. The rising cost of production and transportation of food and livestock feed is a result of various Movement Control Orders (MCOs), pandemic policies and restriction on foreign workers. Yes, despite negative public views on foreign workers, they actually make up 15% to 20% of our workforce—particularly in the manufacturing and construction sectors. They are responsible for a large portion of our food productions. But due to the government restrictions on the import of foreign workers during the 2020 pandemic, labour shortages have caused the level of food production to plummet even as demand increases. And we all know what happens when demand outweighs supply—prices skyrocket. However, labour shortage isn't the only thing that has led to the inflation. Natural disaster has also been known to cause inflation. Remember the severe flooding that hit many integral parts of the country like Selangor between December of 2021 to January of 2022? That probably played a part in halting food productions. When you combine all these factors; increased demand for food, economic reopening, rising oil prices, labour shortage, and natural disaster, it all created the perfect storm for the June 2022 inflation. And yet, despite these bleak prospects, Casadio and Williams assert: "Malaysia is not facing an imminent inflation problem" They predict that the previous inflation rate of January will taper out below 2% by the end of 2022, which is an optimistic outlook for all the parents out there who may worry about price hikes. If the downward trend transpires as forecasted, then we could see prices return to 'normal' as early as October or November. While that may seem like ways away, it does mean that you can put off slamming the panic button until things either improve or get worse. But we can expect the former in this regard because it seems the experts agree that circumstances seem to lean in our favour. It seems the reason for the downward trend is also threefold—the cap on petrol prices, stagnant wages and price controls on food. First the cap on petrol prices, particularly RON95, will help keep oil prices from getting any higher. Second, wages and salaries are still low and stagnant and have yet to recover, so 'wage-push inflation' will not be a contributing factor to the current inflation. Third, price controls across key components of the CPI specifically some categories of food (like chicken and eggs) will mitigate the supply-side pressures responsible for price hikes. Malaysian Mums Voice Their Concern As part of Motherhood.com.my's initiative to learn more about the issues faced by mums during this inflation season, we posted on our Instagram asking Malaysian mums about what they struggled with most because of the price hikes. Here are just some of them. You can probably relate in your own way. Here, we have a mum who's just realised how expensive diapers are getting. She also has had to make some sacrifices for her little one. Inflation has caused parents to skip meals just so they can afford to feed their children. But thankfully, our resident mummy columnist shares some advice here on how she navigates inflation with three growing children. Aside from daily household necessities being affected by the inflation, parents are also worried about making their income go further. This mum is unfortunately not doing so well in her side business. If you're starting to feel all the negative energy start to wear you down, here's some good news to dispel all the doom and gloom that you may be hearing a lot lately from the news. Why Inflation in Malaysia Isn't That Bad Low Inflation Rate As hard as it may be to believe, Malaysia's inflation rate is low. Compared to other countries like the US which is currently experiencing an inflation rate of 4.7%, Malaysia has one of the lowest current inflation rates in the world. If you think that's not high enough, compare Malaysia's current 2.8% inflation with that of Venezuela (1198%), Sudan (340%), Lebanon (201%) and Syria (139%). No, you're not reading those numbers wrong. Inflation rates can and do reach that high—mostly as a result of poor government oversight, political turmoil, war, and of course, excessive printing of money. Government Subsidies The government has announced that they have set aside a grand total of RM77.3 billion worth of subsidies. This has been a great help in controlling prices from rising any further. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said, "the projected consumption subsidies cover petrol, diesel, liquefied petroleum gas (RM37.3bil), cooking oil (RM4bil), flour, electricity, and subsidy bills (RM9.7bil)". Add to that the social welfare assistance like Bantuan Keluarga Malaysia (RM11.7 billion), and other subsidies (RM14.6 billion), the total subsidy so far is RM77.3 billion for 2022. And according to Datuk Seri Mustapa Mohamed (economic minister), without these subsidies, Malaysia's inflation rate would be much higher—possibly even reaching 11.4% by July 2022. Stabilising Prices It may not seem like it now, but fret not, mummies, as prices will sort of go back to normal by November 2022. Price hikes will likely taper off by the end of the year and stabilise thanks to the government subsidies. These subsidies include price ceilings for eggs and chicken, no increase in the water and electricity tariffs, and most importantly, price controls for petrol. As terrible as it can be for the environment, most of us still rely heavily on petrol for transportation, and this does include transportation of food. So, ensuring that petrol prices stay low means fewer additional costs to food production, which is a much-needed relief in these trying times. However, even with these subsidies, many people are still choosing to forego chicken and eggs. At least until prices go back down. And actually, if you want the prices of eggs and chicken to decrease faster, buy less of them. When demand outweighs supply, prices rise. But the reverse is also true—when demand goes down or when supply goes up, prices decrease. In the meantime, you can try other protein substitutes like tofu or seitan, which can be made in the comforts of your own home. Don't Press the Panic Button Yet While it may seem like we're looking through rose-coloured glasses, it's important to remember to put things into perspective. Yes, hundreds of people have suffered greatly because of the price hikes and will probably continue to do so. This recent editorial reported how low-income families and individuals are trying to survive by skipping meals and avoiding outings—such is the effect of inflation on low-income groups. It can be easy for some to point fingers and blame the government, or factories or large corporations. And while they may have played a role, experts agree that the June 2022 inflation was the result of unforeseen circumstances. If you really feel a need to place a blame, then blame COVID-19. Even now, new COVID-19 cases and new variants continue to pop up seemingly out of nowhere. This is due to the economic reopening and will likely continue to rise again. While we may not experience a lockdown as severe as those of 2020 and 2021, it's important to learn from history. So, do remember to always wear a mask, sanitise often and get tested often. Besides containing the spread of COVID-19, it may just prevent another inflation in the future too. For more insightful stories and fun recipes, stay tuned to Motherhood Story!

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