Government to study high cost of living despite low inflation rate

Finance Minister Lim Guan Eng speaks at the Malaysia Property Summit in Kuala Lumpur. (Bernama pic)

KUALA LUMPUR: Finance Minister Lim Guan Eng says the government will investigate why the current low inflation does not translate to lower cost of living.

He said the consumer price index (CPI) for 2018 was only 1% compared to 3.7% when the goods and services tax (GST) was introduced in April 2015.

“We want to study the reasons why this 1% inflation is not flowing to the people in terms of lower cost of living,” he said after officiating the Malaysia Property Summit here today.

He added that a committee had been formed between the finance ministry and the domestic trade and consumer affairs ministry, to study the increase in cost of living.

He said the increase in prices could be attributed to structural factors, adding that the committee would conduct a thorough investigation.

The economy slowed to 4.7% for 2018 compared to 5.9% in 2017 on the back of a slowdown in economic activity. Economists are predicting a growth of 4.6% for 2019.

Lim said it would be a challenge to lower prices, and that the government needed to find an immediate solution.

However, he voiced confidence that investors are showing greater interest in Malaysia, citing Japan’s agreement to issue Samurai bonds on Putrajaya’s behalf with a maximum coupon rate of 0.65%.