PETALING JAYA: The rising cost of living issue has brought about concerns over its impact on the Malaysian households.

       According to Bank Negara’s 2021 annual report, some of the marked price increases were those of essential and frequently-purchased food items such as fresh chicken and eggs.

       Several non-food items were also affected, including furniture and furnishings as well as materials for the maintenance and repair of houses.

       The central bank said the price pressures for the selected items were due to global and domestic factors.

       “Globally, the pandemic has hampered the production and distribution of goods as containment measures were imposed.

       “As major economies reopened at a fast pace from early 2021, industry reports pointed towards a prolonged difficulty faced by the global producers to meet the rapidly rising demand. For example, freight costs became elevated partly due to container shortages.”

       Bank Negara said this led to higher import prices, which eventually affected some domestic producers.

       “As these cost pressures persist, some firms have passed on the higher costs to their customers.”

       Additionally, the central bank noted that energy prices such as crude oil and natural gas have become more expensive worldwide.

       While the direct impact on Malaysia was contained due to the price ceiling on RON95 and diesel, there were indirect effects in the form of costlier fertilisers which is a by-product of natural gas. Furthermore, global prices of food grains such as soybean and corn had reached multi-year highs in 2021.The imports of animal feed had resulted in increased costs for livestock operators, which filtered into higher chicken and egg prices for the consumers, according to the central bank.

       “Domestically, some food producers also faced difficulties to immediately meet the increased consumer demand as restrictions were lifted. Adverse weather conditions compounded these difficulties by causing price increases for fresh vegetables at the end of 2021. Taken together, these factors are pushing prices higher.”

       The central bank emphasised that the severity of the situation varied from one household to another.

       “Consider the B40 households, which spend relatively more on food (35% of monthly consumption expenditure) as opposed to the M40 (30%) and T20 households (23%).

       “The implication is that when price pressures are driven by food items, cost of living pressures are disproportionately experienced by the lower-income households,” it said.