Purchasing power dropped.
Many people say “money is getting smaller.” What they meant is that for the same amount of money, we could buy fewer things. Or for the same amount of money, the size of the things we buy has also gotten smaller. Well, in one word, this is inflation. My mother told me she used to pay just 10 sen for a bowl of laksa. WOW. Haha. By the way, if we think this happens only in Malaysia, please do ask the older Singaporeans of Australians what was the price of food when they were younger versus today. They would share a similar story yeah. Just look at the house prices for a club if you like to know more. As for our purchasing power in general, here’s one latest report.
My comments are in purple.
Article in themalaysianreserve.com Department of Statistics Malaysia (DoSM) Chief statistician Datuk Seri Dr Mohd Uzir Mahidin shared that on average Malaysia’s purchasing power had declined 16.7%. (This meant that the value of money is smaller) However, our purchasing power is higher for communication and clothing and footwear. In other words, communication and clothing and footwear are cheaper today versus 10 years ago. (As someone who owns over 30 pairs of shoes, I can safely say I agree. My shoes are cheaper nowadays versus long time ago. Today, there’s a lot more bigger discounts)
However, we lost a lot of purchasing power in these items: “Meanwhile, the alcoholic beverages and tobacco group recorded the highest decrease in purchasing power by 40.6%, followed by the food and beverages (F&B) (25.8%) and restaurants and hotels (24.5%).”
Sorry to those who loves to drink alcohol and smoke cigarettes. It’s so much more expensive for you. This is the same as food… and hotels… Do read this full article here: Article in themalaysianreserve.com
Staying focus on being ahead of inflation is key
If inflation is 3.5% per year and our salary is increasing by 5% per year, I think we are almost doing okay. However, the focus must be on how to earn a higher income every year because only then would we be better off versus 10 years ago. Investment is one such way. Learn to invest into stocks. Start with property investment with our own home. When our investment returns are higher than inflation, we can be sure that we are not worried with all these reports about lower purchasing power. As for what we could focus on, well here are some steps: It is in this order: salary – savings – invest. Which stage are you in now?
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