The inflation rate in Malaysia has gone up to 4.7% in 2021, the highest it’s been since 2018. In this episode of Property Zone, investment strategist Sean Lee goes through how inflation can affect the way we live.
Some key points that can be taken away from this episode of Property Zone are:
1. Inflation isn’t necessarily bad
It is normal for every country to have inflation – however, inflation rates should be kept at routine and manageable levels.
2. Inflation affects the purchasing power
The amount you spend a year ago changes due to inflation. For example, if you spent RM5,000 on household necessities and you see it increasing to RM5,300, and even RM5,500, this is the effect of inflation.
3. Does income increase in tandem?
While inflation rates are increasing, we need to pay attention to whether our income levels are increasing in tandem. A worrying pattern that can be seen in Malaysia is the stagnance in salary. For example, if one earns RM3,000 monthly, and this figure stays stagnant for the next ten years, the actual value of the income will be less than RM2,000 in today’s value.
4. Worries surrounding stagflation
The high rate of inflation is indeed a concerning matter, but stagnance in the country’s productivity and individual productivity that will eventually result in the country’s contracting GDP and high unemployment rate can be an even more concerning matter. On the other hand, if income stays stagnant despite inflation rate hikes, it will have a direct open impact on an individual level.
Conclusion
As a citizen, understanding inflation and how it can affect your day-to-day life can make it easier for you to plan your expenses. Our economy is on the path to recovery after a long period of isolation, and so long as inflation levels are safely maintained, we can take relevant steps to ensure that it won’t negatively affect our finances in the long run.
>> Did you know that investing in property can help you safeguard your assets during inflation? Read our guide to learn more!
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