Poor Suffer as Living Costs Rise 25%

Living costs have risen 25% in the past five years and placed an "unprecedented" financial burden on the poor, a report has found.

The Joseph Rowntree Foundation (JRF) said rising childcare and energy costs, coupled with stagnating wages and benefit cuts, widened the poverty gap.

Worst affected are pensioners and single people, it said.

The government said it has "taken action" and universal credits would make three million people better off.

The Minimum Income Standard (MIS), released on Friday, looks into goods and services the public think people need in order to have a minimum acceptable standard of living.

Report author Donald Hirsch said: "From this April, for the first time since the 1930s, benefits are being cut in real terms by not being linked to inflation.

"This combined with falling real wages means that the next election is likely to be the first since 1931 when living standards are lower than at the last one."

"This year's report demonstrates how the price of a basket of goods needed for an acceptable living standard has risen far faster than average inflation.

"This has combined with low pay increases to create a widening gap between income and needs."

Deepening poverty

The basket of goods used to judge these figures include day-to-day products such as the weekly food shop and clothing, as well as single-purchase treats such as holidays.

Cuts to benefits and tax credits... combined with stagnant wages and the rising cost of essentials is resulting in an unprecedented erosion of living standards”

Katie SchmueckerJRF policy and research manager

Everyday items found in most homes, from cleaning products to household furnishings, have also been accounted for and broken down to make the total annual figure.

Since 2008 the JRF said real inflation had climbed by 25% rather than the 17% increase as judged by the Consumer Price Index (CPI), the method used by government.

It also found that in the past 12 months pensioners, and those living alone, had been hit hardest with 4.2% increases in their costs compared with the 2.4% rise as indicated by the CPI.

A couple with two children have seen the cost of living rise to 3.7% and lone parents with one child to 3.3%.

Freezing child benefit, tax credits "uprated" by 1% and the increase in the cost of essentials, it added, meant a working couple with two children will be £230 worse off a year, a working lone parent £223 and a single person worse off by £49 per year.

This comes on the back of another report, published by the Office of the Children's Commissioner for England, that said an additional 500,000 children will be pushed into poverty by 2015 on the back of government spending cuts as well as tax and benefit changes.

Stagnant wages

Katie Schmuecker, policy and research manager at the anti-poverty think tank, JRF, said: "The public have told us their everyday costs have soared above wage levels, driving up the amount they need to make ends meet.

"Cuts to benefits and tax credits, especially cuts to support for childcare, combined with stagnant wages and the rising cost of essentials is resulting in an unprecedented erosion of living standards."

The JRF said a single person now needs to earn £16,850 a year, a working couple with two children needs to earn £19,400 each, and a lone parent requires earnings of £25,600, in order to meet basic needs.

A full-time worker on the national minimum wage earns around £13,000.

A government spokesman said: "The dynamic and behavioural changes that will result from our tax and welfare reforms will help improve the lives of some of the poorest families in our communities.

"The government has already taken action to help families with the cost of living, including: increasing the tax-free personal allowance to £10,000, which will save a typical taxpayer over £700; freezing council tax for five years, saving a typical household £600; and freezing fuel duty which has helped to keep fuel prices 13 pence per litre lower than they would otherwise have been.

"Furthermore, our welfare reforms with the introduction of the Universal Credit will make three million household better off - the majority of these from the bottom two fifths of the income scale."

Sam Bowman, research director at the free-market group the Adam Smith Institute, added: "The JRF are right to highlight the fact that rises to the cost of living tend to hit the poorest the hardest.

"I think it's probably a mistake, however, to point to benefits cuts as the main causes of this squeeze."

Coping with rising cost of living

Some 66% of Malaysian households earn less than RM5,000 a month. How do these families cope? Four families earning between RM3,000 and RM5,000 share their smart spending tips.

SK Taman Megah clerk Roshanizar Ali, 41, and her Customs officer husband have five children aged between four and 12 years old and they take home a joint income of RM3,000.

They live in the Kelana Jaya Customs Department quarters and this has helped them save some money on housing rental. However, there is an allowance deduction on this, so it’s not free.

“My average household expenditure for groceries including non-perishables as well as fresh produce is about RM600.

“Out of this, I spend between RM300 and RM350 for dry goods and non-perishables such as sugar, flour, detergent and rice.

“As for fresh produce, my expenditure is RM150 for two weeks’ worth of food, bringing it to about RM300 per month,” said Roshanizar.

She said the first thing they do when they get their salaries is to keep aside between RM100 and RM300 per month for emergencies like illness in the family, or even tobalik kampung.

“Then I will pay off the car loan, any bank loans, the household utility bills, fuel, tuition fees for the children, babysitter fees and other bills like mobile phone bills.

“After doing the rounds at all the supermarkets and hypermarkets in the area, I have found that the cheapest place for me to buy dry goods and non-perishables is Speed Mart,” she said.

“At home, I prepare breakfast and lunch for my family in the mornings. I’m at work by 7.15am each morning and by the time I return home it’s about 6.15pm.

“My children also go to SK Taman Megah so they travel with me. My husband only returns about 8pm after his job as a customs officer in a factory.

“Before he returns I will cook dinner – I will usually cook rice in the mornings to save on time. For dinner, I will cook a vegetable dish and either a fish or chicken dish.

“I will never cook chicken and fish together. We only go out to eat about once a month, we can’t afford to do it more often than that.

“I do feel the pinch from the increase in the cost of fuel prices as I drive a car. But in order to save, my husband rides a motorcycle,” said Roshanizar.

Roshanizar’s budgeting tips are:

• Use your salary to pay for the necessities first such as loans and bills

• Share information of good buys with friends

• If you find things on offer, buy enough to last your family for the following month

• For Hari Raya clothes, don’t wait until it’s actually Raya time to buy. This way, you spread out your spending over the year.

Retiree SL Ho, 60, lives with his retired wife and are dependent on their 26-year-old daughter in Wangsa Maju with a household take home salary of RM3,000.

To save, he said they eat sandwiches every day and they have invested in a bread maker because they found that the prices of bread kept going up but the quality was not improving.

“So we decided to take matters into our own hands and make our own bread. The cost of baking the bread and the sandwich fillings come to less than RM10 each day for the four of us. When it comes to groceries, I buy it either from Tesco or Aeon Big. I tend to buy house brands or generic brands because they cost much less than recognised brand names, There’s quite a sizeable difference in price,” said Ho.

For example, he said this Chinese New Year, a piece of golden pomfret cost him half the price at Aeon Big compared to the wet market.

“I think the quality is up to par, given the big price difference.

“Another thing which I have found is the use of credit cards from banks which offer cash rebates.

“I have a credit card where the bank offers me a cash rebate for purchases I make on it. I also get cash vouchers from hypermarkets and this is also a form of savings for me,” he said.

“I go to the hypermarket about once a week and each time I spend between RM150 and RM200. On average, I spend about RM1,000 on food products and non-perishable household items for the month.

“We save money in other ways as well. I think very carefully about driving to other parts of KL, as petrol costs me RM0.25 per km in my car,” he said.

Causes of Rising in Living Cost

There is no need for a special cabinet committee to study the rising cost of living as the root causes of the problem have already been highlighted in the Auditor General's Report, a political analyst said.

Institute for Democracy and Economic Affairs chief executive Wan Saiful Wan Jan (pic) said weaknesses in the government's handling of finances have already been made known in the report.

"Those are some of the root causes right there. Government wastage, extravagant spending and corruption are a few reasons why this is happening.

 "And it is all in the AG's report. So we don't need a special committee, which will only be an extra layer of bureaucracy, to tell us this," he said.

The scathing remarks from the political analyst comes following an announcement by Deputy Prime Minister Tan Sri Muhyiddin Yassin that a special committee to tackle the cost of living would be set up, to handle the issue in an integrated manner.

Muhyiddin had said that one of the committee’s roles was to coordinate the policies and programmes of the various ministries and agencies involved in easing the burden of the people, and collaborate with the fiscal policy committee – chaired by the prime minister – in scrutinising the government's taxation policy and subsidy rationalisation.

"The outcome of the study would be announced to the public through the various media to facilitate the people in making comparisons and to understand the actual reality on the price increase," he was quoted as saying.

However, Wan Saiful said that he feared the committee would only come up with more "subsidies and cash handouts", such as the Bantuan Rakyat 1Malaysia (BR1M) as solutions to the rising cost of living.

"But that (subsidies and handouts) is also one of the sources. The government has finally realised that it does not have the money to continue with these things.

"We are now suffering as a result of bad decisions by the previous government," he added.

Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed also said that there was no need for a cabinet committee to address living costs if ministers coordinated their work.

He said that ministers only had to work together to show they are sincere in helping the public, especially in the wake of skyrocketing prices of necessities.

"If there is coordination among ministers, there is no need for this cabinet committee on living costs chaired by the deputy prime minister himself," Nur Jazlan added.

DAP secretary-general and Penang chief minister Lim Guan Eng also poured cold water on the setting up of the committee, saying that it would not change anything if it could not ensure that salaries are increased to help the people cope with rising prices.

He said Muhyiddin has used a lot of "fancy academic terms" without addressing the two main issues that concern 28 million ordinary Malaysians: whether Barisan Nasional (BN) is going to reduce prices or increase salaries.

"What is the use of the BN government spending money to create a special laboratory for two weeks beginning today to study measures to ease the burden of the people when they cannot even understand that price increases are not about the price of kangkung alone."

RAM Holdings Bhd group chief economist Yeah Kim Leng agreed, adding that while Muhyiddin's idea was good, it should look into the salaries of Malaysians.

"That is the key to ensure the people will be able to cope. You can't stop price increases.

"The pay should rise faster than inflation," he said.

Yeah called on Putrajaya to get its economic management philosophy right by not interfering with the prices of goods.

"Free market will ensure prices are competitive so the government should not interfere in the pricing system," he said.

"Eliminate monopolies that are keeping prices of goods high," he said, adding that the committee should also educate the public on how Malaysians can cope with the rising cost of living. – January 18, 2014.

Rising costs of essential goods take a toll

By GHO CHEE YUAN and USHAR DANIEL

KUALA LUMPUR, Jan 20 — Following the price increases in a number of essential commodities, The Malay Mail team observed that their cost varied from place to place.

Random checks at four markets in the Klang Valley — the Jalan Othman market in Petaling Jaya, Taman Tun Dr Ismail market, Selayang wet market and Raja Bot market Chow Kit — revealed the following:

Chicken costs RM7.70/kg at the Raja Bot market Chow Kit but RM9/kg at the Taman Tun Dr Ismail wet market.

Prawns cost between RM12 and RM30 per kg at the Jalan Othman market.

However, consumers were being charged RM68-RM88/kg at the Taman Tun Dr Ismail market.

The checks also revealed the prices of vegetables had increased but there was no change for poultry and seafood.

The prices of vegetables fluctuated because of poor supply and weather conditions, while seafood prices varied according to the demand of consumers.

The rising cost of logistics had also contributed to the increase in the prices of goods.

The market stallholders said they were forced to charge consumers more because wholesale prices had gone up.

They also voiced concerns about hypermarkets and other one-stop centres offering competitive prices with more comfortable shopping environment.

As a result of the increases, consumers preferred to look around before buying.

They were aware that prices vary at different locations, leaving them to make the smarter choice when buying their provisions.

Traders forced to charge more

Market traders feel like they are caught in the middle between the consumer and the supplier as the prices of goods fluctuate, forcing them to charge customers accordingly.

A trader from Selayang, who declined to be named, said the prices of seafood and poultry were stable but the prices of vegetables depended on available stock.

“I have no choice but to charge RM10/kg for red chillis and RM5.50/kg for tomatoes,” she said.

“Customers don’t usually feel the pinch, because I do not charge them too much.

“I absorb as much as I can because it is not fair to sell goods at higher prices.”

Thirty-year veteran Chow Kit trader Tan Kim Sui said: “The price of kangkung has gone up to RM3.50/kg from RM2.50/kg after the announcement of its price reduction a few days ago.”

A “Mr Chang” said prawn prices had gone up tremendously in the past two years because many fishermen had opted to export them to China.

“This has affected supply, which caused the prices to go up,” he said.

He said he expected prawns to cost a few ringgit more next week because of Chinese New Year.

Fishmonger Tang Ah Teck said the price hikes would not drive people away from buying seafood.

“It is normal for Chinese to buy seafood for Chinese New Year. The king prawn (meng har) will still the first choice.”

Butcher Zambri Shahbhari said the price of beef had risen by RM2-RM4/kg, from RM14 to between RM16 and RM18.

He said his business had seen a 20 per cent drop, adding that most of the customers shopped around several markets before making their purchases.

Grocer Mustajzun Rahman said the prices of vegetables were stable compared to seafood and other food items, noting that cucumber prices had dropped by 50 sen.

Consumers have to shop around

Consumers said they were left with no choice but to pay higher prices for their provisions.

Security guard Zainal Abdul Hamid, 54, of Kuala Lumpur, said: “Prices do fluctuate but even so, what choice do I have? I still have to buy the necessary for my family.”

However, Zainal said his expenditure had increased only by a small margin.

N. Ramesh, 48, a father of three, said: “Certain goods are cheaper while prices of other goods have increased.

“I can afford to pay a little bit extra but what about the lower income group?

“I live in Pantai Dalam but I have been coming to Raja Bot market for the past 14 years because it is cheaper here compared to everywhere else.”

Ramesh hoped prices would not increase for Chinese New Year.

In Petaling Jaya, Richard Teoh said: “Prices for every necessity item have gone up drastically in the last few weeks.

“This has forced me and my wife to visit several markets before making purchases.”

He noted that silver pomfret would cost RM80/kg at the SS2 market, while it was RM65/kg at TTDI market.

“We are forced to fork out RM300 a week to buy these food items,” Teoh said, where previously he only spent RM150-RM200 a week.

Salmia Beddu, 31, a lecturer, said she and her family would prefer go to the pasar tani to buy vegetables and meat, where they are cheaper and fresher than at the market.

She said her expenditure had increased by RM50 to RM100 in the past two weeks

- See more at: http://www.themalaymailonline.com/malaysia/article/what-price-the-market#sthash.J1bmDnZJ.dpuf

Malaysians went frustration on rising cost of living

Malaysians struggling to cope with the hike in the prices of goods and services vented their frustrations and anger in complaints and New Year wishes posted on Prime Minister Datuk Seri Najib Razak's Facebook page.

Netizens appear unconvinced by Putrajaya’s attempt to justify price hikes and subsidy rationalisation with the argument that it was necessary to protect the economy and investor confidence.

Their Facebook postings range from attacks to pleas, with one user, Mumtaz Haris, suggesting that Najib and the entire Cabinet should step down if they could not resolve the issues plaguing the people "since they were useless and inefficient".

In his Visit Malaysia Year 2014 message, Najib had said that preparations were being made for the year ahead and he called on Malaysians to welcome tourists with a smile.

His message attracted various responses. One user, Joseph Gasis, said he is not sure whether he can smile because he has spent RM600 on school uniforms, bags and stationery for his children. He said he would also have to fork out another RM300 for the school bus fare. Joseph also said he has been unemployed since June and lamented that his savings will not last very long.

Shahrul Bahaman said the new year will be a sad one.

Meanwhile, a posting by Norie Noriah which attracted 5,108 likes, warned the government to tackle the cost of living issue before the people shifted their support.

Another user, Ahmad, wrote that before the 13th general election, Putrajaya had promised there would be no price hike, but it was a different story now.

Sharing the sentiment was Atiqa Ali who asked Najib why the public was burdened with increase after increase in the prices of services and goods when they were already struggling to eke out a living.

She asked Najib what had happened to all the promises made by Barisan Nasional before the 13th general election.

Imran James Dio said even with the Bantuan Rakyat 1Malaysia handouts, the people were still struggling. He added that Malaysia should not achieve developed nation status by 2020 at the expense of the public.

User KY Kheng posted a unique calendar of 12 price increases for every month of the year – sugar, petrol, Astro, assessment rate, bus fares, electricity tariffs, LRT fares, water rates, toll rates, vegetables, basic essentials and the soon-to-be introduced Goods and Services Tax.

Victor Luke slammed Barisan Nasional, calling it a Mickey Mouse entity.

While announcements of price hikes have been met with anger by the public, what irked them further were the wastages and leakages revealed in the 2012 Auditor General's Report. The report revealed that public funds amounting to billions of ringgit had been wasted.

The public's mood was not improved when a pro-Umno consumer group told Malaysians feeling the pinch to work harder. The Muslim Consumers Association of Malaysia (PPIM) said consumers had to bite the bullet instead of sitting at home and fearing the worst.

University students had a different solution to the price hikes, forming the Reduce Cost of Living Movement, or Turun. A rally to protest the price hikes is scheduled to be held at Dataran Merdeka on New Year's Eve, despite attempts by authorities to paint a negative impression of Turun. 

Government to monitor effect of rising cost of living

KUALA LUMPUR, Dec 31 — The government will, from time to time, implement suitable initiatives under the Cost of Living National Key Result Area (NKRA) to cushion the effects of increases in the prices of goods and the rise in the cost of living.

Deputy Prime Minister Tan Sri Muhyiddin Yassin, in his New Year message, said the effect of the increase in the prices of goods on the cost of living would continue to be monitored to ensure the people's well-being is not affected.

“The government listens to the woes of the people with great concern. As such, it will implement steps to reduce the burden of the cost of living which are mostly contained in the Barisan Nasional (BN) Manifesto during the 13^th general election and 2014 Budget tabled by the Prime Minister,” he said.

Muhyiddin said among the initiatives taken to reduce the burden of the people included expanding the 1Malaysia People's Aid (BR1M), RM100 schooling aid for each student, abolishing school fees, food aid and textbook loans.

In addition, school bus insurance, 1Malaysia Book Voucher, opening of more farmers' markets, 1Malaysia People's Shop (KR1M) other than direct from factory sales to ensure reasonable prices for food products and basic necessities, and other aid to ease the burden of cost of living of the people would also be continued, he said.

“These measures clearly show that the government is always concerned about the well-being of the people and always gives priority to programmes to ease the burden from the cost of living,” said Muhyiddin who is also Education Minister.

He stressed that all the measures implemented were to ensure that the nation achieved a developed nation status with high income, with the people enjoying a better quality of life.

Touching on the rationalisation measures implemented by the government, Muhyiddin said it was implemented with care and in stages to ensure a minimum impact and did not burden the people, especially the low-income group.

“The savings as a result of the subsidy rationalisation moves indirectly will be returned to the people especially the target group so that the effect of the increase in the cost of living can be offset.

“This approach is to support continuous economic growth and at the same time ensure the well-being of the people is not affected,” he clarified.

Muhyiddin, in the meantime, also lauded the announcement of Prime Minister Datuk Seri Najib Tun Razak on the 11 steps to reduce government expenditure, including cutting the entertainment allowances of ministers and deputy ministers by 10 per cent.

“I believe the cost cutting moves of the public sector announced by the Prime Minister yesterday was timely,” he said.

He said when the people were burdened by the increase in the cost of living, it was apt the leadership and the highest management of the public sector also made some sacrifices.

“The proceeds from the cost cuttings by the government through the reduction of entertainment allowances and other facilities enjoyed previously can be channelled to the needy.

“I also believe the public sector's cost cutting measures can ensure prudent spending is more efficiently practised by the public sector, and in avoiding leakages,” he said.

Muhyiddin said the government also hoped the people could together with the government weather the challenge of the increase in the cost of living and would not be easily trapped by the instigations of certain quarters to go to the streets to protest against the prices of goods and seek to topple the government in an undemocratic manner.

“Although, it will feel a bit burdensome in the short term, it will be more beneficial and sustainable in the future.

“Going down to the streets is not the way to solve problems, on the other hand it will give rise to chaos and worsen the situation,” he said.

He also believed the problem could be resolved when the people and the government stood shoulder to shoulder to weather the challenges and find a solution together.

“In this spirit, the government lauds any view and suggestion from the people which can help the government carry out more comprehensive measures to boost the well-being of the people in an uncertain global economy,” he said.

Muhyiddin also took the opportunity to wish Malaysians Happy New Year 2014 and hoped it would bring a ray of hope to all. — Bernama

See more at: http://www.themalaymailonline.com/malaysia/article/government-to-monitor-effect-of-rising-cost-of-living-says-muhyiddin#sthash.qEteFqFf.dpuf

Malaysia – rising cost of living had lessened the feeling of being rich

PETALING JAYA — There may be more millionaires in Malaysia now than before but they may not necessarily be feeling rich.Besides the rising number of successful business owners, many high-salaried people are already millionaires based on the value of their assets and properties.

RAM Holdings BHD group Chief Economist Yeah Kim Leng said the term could also apply to those in the middle class who could have earned the amount but had spent it on necessities such as on costly children’s education and high property prices.

He said although a millionaire was measured by his or her disposable income, those who have made their millions would not have the same purchasing power compared to a decade ago, citing inflation as the main reason.

He said many in business had made their millions as a result of savvy investments and the growth of the industries that they were involved in, adding that overall, the rising affluence was due to sustained economic growth.

“We have seen a strong growth in certain sectors, including plantation, oil and gas and property, which have elevated entrepreneurs into the millionaire class,” he said.Billionaires, however, remain rare. Malaysia now has 30 billionaires, just three more from the 27 on the list last year.

The Wall Street Journal (WSJ) reported last year that Malaysia’s millionaires almost doubled over the previous 18 months.Citing a report by international financial firm Credit Suisse Group, it said Malaysia added 19,000 new millionaires since early 2010, bringing the total to 39,000 as of October.

The WSJ report attributed the rise to the weakening U.S. dollar and careful spending.

Dr. Yeah said those who invested their money wisely had benefited the most.

“In a free market and capitalist economy like Malaysia, people who have capital can generate millions,” he said, noting that many in the upper-income bracket had accumulated wealth past the million-ringgit mark.

Personal financial consultant Carol Yip said the rising cost of living had lessened the feeling of being rich.

“Today, even a small apartment can cost half a million,” she said.

She said careful spending was not a factor for the increase in the numbers of millionaires.“If we are spending less, we won’t be seeing so many luxury cars on the road,” she said.

She said the rise in millionaires was also due to property prices which have shot up exponentially, adding that the definition should not include the value of the house that one was living in.

“If you still have a million in hand after you convert the value of your other properties, investments and have paid of all your debts, then you are a millionaire,” she added.

Financial adviser Fred Wong said making a million was not a problem these days as long as people were willing to work hard, but being self-employed and investing wisely was the better route to riches. -The China Post

Read more at:

http://www.kualalumpurpost.net/malaysia-rising-cost-of-living-had-lessened-the-feeling-of-being-rich/