Institutional Reforms |  

Cost of Living Determinants

Posted on September 18, 2018


Oil and Fuel Prices
The rise and fall of oil prices determine not only your spending at the fuel pump but a whole array of products.  A hike in fuel prices at the pump will definitely set off a broad-based price increase as the price to transport them will inevitably increase in tandem.

Oil is the base material in the production of many types of chemicals that in turn are used to produce a very wide range of industrial and consumer products. Hence, it is also inevitable for pricing increase in petroleum-based raw material costs which puts pressure on the price of goods. 

Malaysian Ringgit Value
How much of goods and services we can buy with every Ringgit we earn very much depends on the strength of our currency. A stronger Ringgit makes it cheaper when we import goods and services, and vice versa.  


Labour Cost

Even though we are now living in the new industrial 4.0 economy, human workforce still plays an important role in most businesses.  An increase in the minimum wage and also the government's policy to reduce the percentage of cheap foreign labour will definitely burden businesses financially, in particular, the labour intensive industries, on their cost of production and operations.  This will naturally raise the prices of goods and services to end-consumers.

Taxes, Levies and Tariffs
Either GST or SST, the consumers have to pay more for their purchases.  GST taxes the consumers at the point of purchase while SST taxes the producer or importer at the point of their purchase, who will, in turn, build in the taxes paid into the price of goods.  Either way, consumers have to pay more for goods.




Location: Malaysia

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