High Cost Of Living Essay

Average Monthly Income

In recent years, the average monthly income in Malaysia has steadily increased. In 2012, the government announced a 7.2% rise and a better monthly household income all over the country. Kuala Lumpur was at the top of the list, recording the highest growth rate. Overall, the average monthly income has climbed to 7,400 MYR.

At the same time, however, the cost of living in Malaysia is increasing as well. Especially luxury items and eating out can come at a cost. Malaysians are struggling more and more to make a living and support their families. Let’s take a closer look at the average living costs in Malaysia.

Starting with the Basics

Whether you find the cost of living in Malaysia rather low or you struggle to get by depends largely on your living situation and on where you come from. Expats from so-called industrialized countries often experience Malaysia as a very affordable place to live in. However, those who come with their families need to factor in additional expenses and school fees.

If you like to go out for dinner, you can expect to pay approximately 50 MYR for a meal for two at a mid-range restaurant. Basic utilities for an average apartment are around 176 MYR and an internet connection might cost you an additional 149 MYR. The amount you need to factor in for rent varies considerably depending on the city and neighborhood you live in. A one-bedroom apartment can cost you between 700 MYR and 2,000 MYR, while you might spend up to 4,000 MYR on a 3-bedroom apartment.

If your children are supposed to attend an international school in Malaysia, this can add another 50,000 MYR annually to your cost of living in Malaysia. In addition to other expenses, some typical food items are also becoming more and more expensive. These include shallots, red chilies, and mackerel.

Comparing Different Cities

Metropolis Kuala Lumpur and popular tourist destination Penang are quite similar when it comes to cost of living. The popular tourist destination Penang used to be the most expensive city in the country, but the prices have stabilized in recent years.

On 1 April 2015, the Goods and Service Tax (GST) was implemented in Malaysia. The GST is a value added tax, set on 6%. Jobstreet stated that a quarter of the respondents to their survey were already facing problems with their expenses before the GST was implemented. After the implementation, employees considered changing jobs to be able to better cope with the new tax, 47% started packing food from home and 56% minimized the amount of lunches with colleagues. Only 19% of the respondents said that the GST had not affected their work routine.

The Struggling Middle Class

As mentioned above, the cost of living in Malaysia has increased significantly in recent years, which has led the population to tighten its belt. While low-income families receive support through different welfare programs and highly-paid professionals benefit from a reduced income tax, it is the middle class that struggles the most.

In 2014, more than in the previous years, getting by on your monthly income is a major concern for expats. Imported goods, food, transportation, housing, and everyday expenses are on the rise and add to the cost of living in Malaysia. In September 2013, the government rolled back subsidies for local businesses. These in turn passed on the rising costs to their customers by raising their prices by about 20%.

At the same time, many people have received a pay raise to cope with the rising living costs in Malaysia. Especially non-executive workers should receive a bonus from their companies to help them cope. Unfortunately, the sharp rise in Malaysia living costs is incredibly overwhelming for many people and the slight pay increase is often not enough to make a difference.


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If you think your dollars aren't stretching as far at the grocery store, you’re not imagining things. The U.S. Department of Agriculture expects retail food prices to rise between 1.0% to 2.0% in 2018, with several categories, including fats and oils, vegetables and pork, experiencing potential price declines. And it’s no different at the gas station, where prices at the pump hit an average of $2.67 in January 2018 – 21 cents higher than gas prices at the same time a year ago.

You might hear a lot about rising inflation and cost of living, but what do these terms really mean? And most important, how do they affect your daily life?

What’s the Difference Between Inflation and Cost of Living?

People often use the phrases “cost of living” and “inflation” as if they were synonymous. They are not the same, although closely related. Inflation is the big picture: As the cost of goods and services rises, the buying power of the dollar falls. The inflation rate is often measured by the Consumer Price Index (CPI) – a monthly measure by the Bureau of Labor Statistics that averages the cost of a representative basket of goods and services from areas around the country. It then reports the result as a percentage rise or fall.

Cost of living, on the other hand, is a more focused picture. This number averages the cost of an accepted standard of living that includes food, housing, transportation, taxes and healthcare. Cost of living is frequently used to compare life in different locations around the country or the world. For example, if you made $50,000 per year living in New York City, you could maintain the same standard of living in Chapel Hill, NC on less than half that annual salary – the cost of living in Chapel Hill is estimated to be 58% lower than that in New York City, according to PayScale. 

When the Going Gets Expensive

It’s easy for most people to feel the effects of cost-of-living increases in their daily life. But rising prices hit the lower and middle classes especially hard. Higher food, gasoline and utility costs mean less money remains once these necessities are paid for, leaving little for savings or discretionary spending. To compensate for the rise in prices, consumers tend to buy less, switch to less-expensive substitutes or drive farther to find bargains.

It’s especially difficult to keep up with the rising cost of living when your paycheck isn’t growing at a similar rate. According to the Bureau of Labor Statistics, the median weekly earnings for full-time wage earners was $857 in the fourth quarter of 2017 – 0.9% higher than a year's earlier, although the CPI has risen 2.1% since then.

How Inflation Hits the Housing Market

You would assume that higher inflation means higher prices for real estate, and that is often the case, at least at the start of a significant spike in inflation. But then things can get complicated. To keep inflation rates under control, the Federal Open Market Committee (FOMC) often steps in and raises the Federal Funds Rate, which is the interest rate charged to other financial institutions using the Federal Reserve Bank. As the cost of home loans goes up, many consumers are squeezed out of the market, leading to a slowdown in home sales. With homes on the market for longer periods, sellers tend to drop their asking price to attract buyers. Although economic recovery is far more complicated than any single factor, lower interest rates have helped the devastated housing market begin its slow recovery since 2008. 

The Bottom Line

With pay increases lagging behind rising inflation, you can expect your wallet to continue to take a beating as the cost of living increases in just about every aspect of daily life. But try to keep your eye on the long term. Although you may need to cut back spending in some areas, don’t let today’s high prices discourage you from saving for tomorrow’s needs.

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