Overshadowed by last week’s release of GDP data were five (count’em, five) other important data releases, one of which was the report on July consumer prices. Needless to say, the report showed accelerating price increases (log annual and monthly changes; 2000=100):
On an annual basis, CPI inflation ticked up to 2.0%, with the impetus mainly coming from higher food prices…again (log annual and monthly changes; 2000=100):
Food price increases are running at close to 4.0%, or nearly twice as fast as the overall CPI. On a monthly basis, food prices have not stopped increasing since CNY.
We’re still likely to see full year 2013 inflation come in well below BNM originally forecast, but since nominal income growth is slowing that’s probably cold comfort.
Technical Notes:
July 2013 Consumer Price Index report from the Department of Statistics
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hisham,
ReplyDeletewhy are food prices rising so fast in malaysia? don't we produce alot domestically?
Jon,
DeleteI'm told as much as 2/3rds of food processed for the domestic market is actually imported. I'm not sure how accurate that estimate is, as the food security numbers suggest we are close to self-sufficiency in most basic staples, except for beef and seafood.
In any case, even domestic produced food is subject to considerable price volatility. It's not uncommon to see prices of particular food items (especially fresh produce) to record double digit price increases one month, and crash back down again in the following months.
If you follow the link at the bottom of the blog post, the report actually provides a list of notable food price increases during the month (right at the bottom). This month its tomatoes, +15.8% in June from July, or an annualised price increase of 580%. Cucumbers fell 8.7%, which works out to a price drop of 272%.
Given the trend of CPI especially on F&B is keep increasing, don't you think implementing GST will make matters worse..
ReplyDeleteIt is notable that Government needs to implement some fiscal consolidation to cushion Global Economics slowdown and improve public Finance, but given the trend of F&B CPI, and lack of enforcement effort, things will go bad especially to the rakyat.
Your opinion?
Mohamed
Mohamed,
Delete1. Food already attracts sales tax of between 5%-10%. Implementing GST at 7% might actually make most things cheaper, especially since basic foods like rice are likely to be zero-rated (i.e. no tax at all).
2. Fiscal consolidation will not "cushion" an economic slowdown - it will make things worse.