How Do You Tell Whether Malaysia Is Heading Towards Hyperinflation?
Inflationary pressure in 2022 is a global phenomenon in line with the price of Brent crude oil which has remained above $100 per barrel since the end of March 2022
That was basically the question asked by Sen Nuridah Mohd Salleh to Finance Minister Tengku Zafrul Aziz and the latter's answer is that Malaysia Will continue to suffer from rising prices of goods mainly due to external factors.
"The increase in the price of goods, especially finished products and imported intermediary goods, is difficult to avoid completely until the pressure from these external factors stabilizes," he says.
He adds that inflationary pressure in 2022 is a global phenomenon in line with the price of Brent crude oil which has remained above $100 per barrel since the end of March 2022.
Disruption of the world supply chain which has affected the supply of fertilizers and fodder has also increased food prices sharply, he says.
Since Malaysia is an open economy, without little barriers for the entry of goods and supported by strong export drives, Malaysia is not exempt from global inflationary pressure, he says.
Inflationary anxiety
"Nevertheless, the Government is always concerned about the increase in the rate of inflation which causes anxiety among the people and businesses and continues to monitor the current global economic development.
"The inflation rate in Malaysia in June 2022 recorded 3.4 percent, driven by food and non-alcoholic beverages (6.1 percent), transportation (5.4 percent) and restaurants and hotels (5.0 percent).
"In the same month, inflation rates in several developed and regional countries such as the United States and the United Kingdom exceeded 9 percent, Thailand exceeded 7 percent, and Singapore and the Philippines exceeded 6 percent," he adds.
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Avoiding hyperinflation
Later on in the reply he mentions that various measures have been implemented by the Government to control the increase in the price of basic goods and services, including price control on selected goods and services, particularly through the provision of fuel and selected food price subsidies as well as electricity rebates for domestic consumers.
According to him, the move has helped ensure the inflation rate in Malaysia for June this year at a moderate level compared to other countries.
"This step can further avoid hyperinflation, which is when the inflation rate remains at a very high level from one month to the next, so that it can erode the value of a country's currency.
"In addition, the current fiscal policy and monetary policy also remain accommodative in ensuring that the country's inflation is at a controlled level."
