Is Our CPI a True Indicator?

Conversations with senior economists indicate that actual CPI is higher than the official figure. Read The Star reader Anwarudin's views on this...

 Inflation figure must reflect the actual CPI

WITHIN a month, world food price (especially rice) has increased sharply. In Kuala Lumpur alone, most of the restaurants and food stalls raised the price of rice from RM1 to RM1.20 or even RM1.40.

Now do the mathematics. Do you think this is merely 3% inflation as reported by Bank Negara?

Let’s be more practical when it comes to determining purchasing power and inflation. The impact of coming out with a low inflation number eventually jeopardizes our life.

Most companies use this number to adjust their staff’s annual increments although some have their numbers based on personal and company performances.

Thus, Malaysian workers will get increments of between 2% and 2.5%.

Bank Negara’s inflation rate only measures basic foodstuffs that are subjected to price control and fails to reflect the true situation. The real inflation reported by many groups of public interest is as high as 20% according to the “real” CPI (Consumer Purchase Index), also referred to as cost-of-living index.

We can maintain our lifestyle if we get an increment that equals real inflation, i.e. 20%, which means to say that we will be able to convert our whole income into a quantifiable amount of goods and services that we could obtain in the previous year.

I hope those involved in monitoring inflation will visit shops patronized by average Malaysian consumers and share our pain.

ANWARUDIN

(Source: Views, The Star, 5 June 2008)