Re-examine consumer price index, expert says after J-KOM's grocery infographic gaffe

A financial expert has urged the government to review the consumer price index (CPI) after the Department of Community Communications' (J-KOM) attempt to debunk the narrative of rising grocery bills backfired, turning into a subject of ridicule on social media. 

Speaking to MalaysiaNow, financial planning expert Farid Affandi said that the current CPI does not accurately capture the real cost of living.

"What J-KOM presented in its infographic were items that are included in the CPI calculations.

"But most of the items are either price-controlled or subsidised by the government," he said.

Last week, J-KOM director-general Mohammad Agus Yusoff put out an infographic stating that a family of four earning a minimum monthly income of RM1,500 can still afford basic necessities.

While the post sought to counter claims that the cost of groceries would rise from RM200 to RM500, as reported by a daily, it backfired as it said that a household of four could survive on RM391 worth of groceries a month, while a single-person household would only spend RM228 a month on those items.

The groceries shown in the post included chicken, rice, eggs, bread, cooking oil and a cylinder of gas.

Another post, meanwhile, compared the current price of groceries with that during the Perikatan Nasional administration.

J-KOM took down the posts following a public backlash.

Farid said that the public is increasingly sceptical about the CPI as it is no longer an ideal measure for assessing changes in the cost of living.

The CPI is published by the Department of Statistics under the economy ministry.

"The annual increase in salary is also calculated based on the CPI, which only takes into account some price increases in basic necessities. Even the minimum wage is determined by the CPI.

"The CPI can be manipulated because most of the essential grocery items in its basket are either subsidised or on the price control list."

Farid said the government needs to review the CPI so that it better reflects reality.

He added that the cost of living generally represents household spending on goods and services necessary to maintain a certain standard of living, and that this is an issue that has plagued the government for years as the prices of goods have consistently risen without a corresponding increase in wages.

Previously, MalaysiaNow reported predictions on the government's anti-graft drive, questioning its effectiveness amid greater concern by some about the cost of living and the price of daily necessities than corruption. 

These concerns came amid a decline in the ringgit value, which led to increased import costs. 

In 2021, Malaysia's annual food imports reached a record high of RM63 billion.

The increase in the price of goods was also driven by inflation caused by an excess supply of money in the market.

Farid said this was due to the government allocating significant amounts of money for Bantuan Prihatin Nasional, loan moratoriums and Employees Provident Fund withdrawals to assist people facing financial difficulties during the Covid-19 pandemic.

"Purchasing power has also increased because most Malaysians spend money they do not possess, such as on credit card debts and personal loans," he added.