Inflation is a very common word. Inflation caused prices to go up, thus purchasing power is reduced. By the way, inflation is also one of the reasons why we receive increments of a few percent per year. If prices of goods remain exactly the same; without any inflation at all, there is really no need to pay us a higher salary every year. Imagine if home prices were still RM85,000 for a semi-detached in a prime area in Ipoh today, why should people working in Ipoh be paid higher? That RM85,000 home is however RM540,000 today, that’s due to inflation and that’s why we have higher salaries, else we could not afford it.
So, is inflation good or bad then? Inflation numbers when it’s too high will crippled the economy. Anything double digits will be very bad. Anything higher than 5% in my opinion warrants a lot of actions from all stakeholders already. Okay, then what happens when the inflation is just too low? I mean below 1% or even closer to 0%? Should we do anything about it or just be MERRY with it? (Pun intended with the good Merry since Christmas is just around the corner)
Article in themalaysianreserve.com MALAYSIA’S Consumer Price Index (CPI) — a measure of the country’s inflationary level — rose 0.9% year-on-year (YoY) to 122.1 points in November from 121 points last year. As for the similar period as last year, for the January and November 2019, the index has recorded an increase of 0.7%.
Department of Statistics Malaysia chief statistician Datuk Seri Dr Mohd Uzir Mahidin said, “The increase in the overall index was driven by the index of miscellaneous goods and services, housing, water, electricity, gas and other fuels as well as education.”
Three states, namely Kuala Lumpur, Selangor and Penang, recorded higher inflationary rates, surpassing the national CPI rate of 0.9% in November 2019. In June 2018, the inflation rate fell below 1% for the first time in 40 months due to the zero-rated Goods and Services Tax, and discounted prices of goods. Bank Negara Malaysia said last month it expects the country’s headline inflation to be “low” in 2019 and remain modest with a slight increase in 2020. Please refer to the full Article in themalaysianreserve.com
By the way, inflation will also cause property prices to increase yeah. In other words, if inflation is low, property prices should remain almost the same. Let’s wish for that yeah. The reason inflation influences property prices is because with inflation, people need a higher pay to buy the same goods and services which had also increased in price. Construction materials like sand, cement, bricks and more may have also increased in price and this will ultimately add into the final cost of construction for the home.
Yea, if you are hoping that property prices will remain almost the same since inflation is very low, I wish for the same too. I need time to save money for my next home purchase. Unfortunately for me, money does not grow on trees and I am not a speculator too. Happy understanding about inflation and planning your next property purchase.
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