Malaysian Inflation Rate: Myth or Fact?

Everywhere I go, everyone I meet, shares the same sentiment,moans and groans about the same problem. Complaining about the ever increasing price and ever diminishing purchasing power, But everytime they turn on the TV to listen to the ministerial announcent or they read on the mainstream newspapers, they are fed with quite opposing news. It leaves them bewildered. They even start to doubt their ownself,  

The figure above shows the inflation rate for Malaysia from January 2008 to March 2011 (you gotta be kidding me) What are the rakyat whining about? It doesnt make any sense at all right, our inflation rate is quite controlled, in fact we even had deflation for the second half of 2009. Okay some Economic 101 lessons (or should I call it Economic for dummies...nahhhh).What is inflation or inflation rate?

In economics, the inflation rate is a measure of inflation, the rate of increase of a price index (for example, a consumer price index). It is the percentage rate of change in price level over time. The rate of decrease in the purchasing power of money is approximately equal..The inflation rate in Malaysia was last reported at 2.8 percent in March of 2011. From 2005 until 2010, the average inflation rate in Malaysia was 2.77 percent reaching an historical high of 8.50 percent in July of 2008 and a record low of -2.40 percent in July of 2009. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy. Hmmmm! Basically inflation rate will tell you by how many percent the prices have changed (if positive, prices increased, if negative prices decreased) compared to the previous period.Prices of what...a basket of goods and services of a man on the street. For Malaysia there are almost 460 items in the basket, so it is average of these prices, some may increase, some stay put and some might decrease (no way...). For your kind information items included in the basket are such as:

Food & Non-Alcoholic Beverages ,Alcoholic beverages, Clothing and footwear,  Housing, Water, Electricity, Gas & Other Fuels , Transport , Tobacco , Restaurants & Hotels , Recreation Services & Culture, Education , Health, Furnishings, Household Equipment & Routine Household Maintenance, Communication, Milk, Cheese & Eggs, Rice, Bread & Other Cereals, Sugar, Jam, Honey, Chocolate & Confectionery, Oils and Fats, Fish & Seafood, Coffee, Tea, Cocoa,.

Due to space and time constrain, I didnt list all the items...but to just give you the rough idea....take a good look at the list above...the one in bold, I am pretty sure have increased dramatically for the last few years and Ihonestly feels that by no chance our inflation rate will still be at the controlled level, if you think otherwise....I rest my case. I have a funny feeling that the inflation rate is like the API(air pollution index) when the keep repeating that it is still in the acceptable and not hazardous level,and you leave the house and realize that the visibility is so bad that the report just cant be true....till we meet again..adios