According to its Malaysia Economic Monitor (MEM): Smart Cities November 2011 report, high inflation meant that Sabahans would spend more of their income on food than even Sarawakians and West Malaysians.
According to the report, “Sabah residents are more heavily hit than those in Peninsular Malaysia and Sarawak because Sabah residents not only faced relatively high food inflation, but they also generally spend a higher share of their income on food items.”
The report added that Sabahans spent 27.5% of their income on food items, compared to 23.2% for Sarawakians and 19.2% for West Malaysians.
Sabahans were not the only ones heavily-affected by food inflation.
According to the report, rural West Malaysians were more likely to spend “proportionally more on foods which recorded steep price rises” than they did on housing and public utilities.
Citing an example, it noted that Malaysian households that earned less than RM500 a month spent nearly a third of their income on food, compared to nine percent for households with RM5,000 monthly incomes.
It does not help that Sabah, according to a previous FMT report, had the highest rates of poverty in the country.
The article quoted last year’s MEM report which noted that “more than 40% of all poor people in Malaysia lived in Sabah”.
The report also quoted its World Bank East Asia and Pacific Region Human Development Sector director Emmmanuel Jimenez as saying that there were “deep pockets of poverty” in Sabah.
Subsidy slash and policy changes
The situation it appears has seen little improvement. It has also not helped that the average salaries had increased by only 1.9% since the 1997 economic crisis.
The rise in food prices, the latest World Bank report said, was in part, affected by government policy changes, such as subsidy cuts.
“Some of the price hikes are policy-induced, eg. price subsidy cuts for sugar, fuels and gas and excise duty hike for cigarettes,” the report said.
It added that other factors such as bad weather – including excessive rains – also affected the price of vegetables.
These factors caused food items such as fresh vegetables, seafood and meat to see a respective inflation of 7.1%, 7.4% and 8.5%.
The highest inflations, according to the report, were in items such as potatoes, coconuts and nuts (considered as one) as well as sugar.
They each recorded inflations of 14.3%, 18.1% and 25.8% respectively.
“All major food items except rice and fresh fish registered significant price increases,” it said.
The report also noted that overall goods and services was also up by 3.1%.
Earlier in June, the Economic Intelligence Unit (EIU) confirmed that consumer prices would rise following the government’s move to slash subsidies.
It anticipated a 3.3% inflation this year, and a 3.5% increase between 2012 and 2015.