Despite Malaysia’s low and stableinflation rate, there has been an ongoing debateregarding perceived increases in the cost of living in thecountry. The concerns are frequently expressed in publicpolicy discussions, the mass media, and privateconversation. The issue has featured prominently in publicand private discourse for years, dating back at least to therationalization of the fuel subsidy in December 2014 and theintroduction of the Goods and Services Tax in April 2015.More recently, there has been a robust public debate aboutwhether Malaysia should raise the nationally defined povertyline. These concerns have emerged during a period of lowinflation; the average annual headline inflation rate stoodat less than 2 percent beginning in January 2015 and hasdeclined to less than 1 percent since January 2018, wellbelow the growth rates of the economy and average nominalincomes. In this context, the “cost of living” is frequentlyused as a catchall term that may reflect wider developmentsin the economy and the associated impacts on householdbudgets and well-being. While the discussion is usuallyframed as an issue of the rising costs of goods andservices, the core issues for most Malaysians extend beyondprices. These include lagging income growth and greaterindebtedness that results in less disposable income andinadequate financial savings. In addition, rising homeprices also feed into the concerns of many Malaysians abouthousing affordability and the cost of living.
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