Malaysians spending 10% more on household expenses

An expert says this reflects an overall improvement in standard of living among Malaysians

By ALIFAH ZAINUDDIN / Pic by TMR

Malaysians are spending up to 10% more on their household expenses, with the average monthly household consumption rising by nearly RM500 to RM4,033 in 2016.

The Department of Statistics’ latest report on household expenditure revealed that all states in Malaysia recorded an increase in domestic spending, with eight states exceeding the national growth rate of 6% per annum.

Wilayah Persekutuan (WP) Putrajaya recorded the highest growth rate at 10.7%, followed by Terengganu (10.4%), Perlis (9%), Penang (8.9%), Negri Sembilan (8.4%), Perak (7.9%), WP Labuan (7.6%) and Melaka (6.9%).

In terms of value, WP Putrajaya topped the list with monthly household consumption expenditure at RM6,971, followed by WP Kuala Lumpur (RM6,214), Selangor (RM5,183), Melaka (RM4,374), Penang (RM4,190), Johor (RM4,148) and WP Labuan (RM4,069).

Other states recorded the mean monthly household consumption expenditure below the national level of RM4,033.

The report further stated that the average monthly household consumption expenditure in urban areas posted a yearly increment of 5.8% from RM3,921 to RM4,402, while expenses in rural provinces also increased 5.7% annually to RM2,725 from RM2,431.

The bulk of household expenses were concentrated on housing utilities at 24%, with food and non-alcoholic beverages (18%), transportation (13.7%), and restaurants and hotels (13.4%) trailing closely behind.

Sunway University Business School economics Prof Dr Yeah Kim Leng said the upward movement of the indicator reflected an overall improvement in standard of living among Malaysians.

“Households continue to show rising real expenditure, which means that welfare has improved.

“It doesn’t tell us that households are spending from increased borrowings or reduced savings, but there is sustained increase in real consumption — and this is one of the indicators of rising living standards,” Yeah told The Malaysian Reserve when contacted.

The higher expenditure is consistent with the increase in average household income, which grew by 6.6% per annum to RM5,228 in 2016 from RM4,585 in 2014.

Separate data from the department showed that the median household income for the bottom 40%, middle 40% and top 20% groups grew last year by 6.6%, 6.9% and 6.2% respectively from 2014.

Household income grew in all states, with five exceeding the national growth rate of 6.2%. Terengganu recorded the highest growth rate of 9.1%, followed by Perak (8.6%), Pahang (7.2%), Selangor (6.8%) and Kelantan (6.3%).

WP Kuala Lumpur recorded the highest mean monthly household income of RM11,692 in 2016, followed by WP Putrajaya (RM11,555), Selangor (RM9,463) and WP Labuan (RM8,174). Other states’ mean monthly household income were below the national level of RM6,958.

Galen Centre for Health and Social Policy CEO Azrul Mohd Khalib said despite the higher income, it remains to be seen whether it has made an actual difference in dealing with the rise in cost of living.

“Average household expenditures will certainly continue to follow the trend of increases which have been seen over the past 15 years. It is not expected to slow down.

“It will be challenging for wages to keep up with the increases in the cost of living,” Azrul said.

He said the findings of both reports may be used to justify the need for the government’s targeted cash assistance schemes such as the 1Malaysia People’s Aid programme.