PETALING JAYA: The increase in the Malaysian household monthly income may not necessarily reflect improved private consumption among Malaysians, largely due to the rising cost of living.
An economist told StarBiz that he remains neutral on the latest household income figures as there was no significant improvement in domestic private consumption albeit the increase in household income.
“While households’ median monthly income in Malaysia further improved last year, this does not reflect a much stronger private consumption among the households. This is mainly due to the rising cost of living, which has offset the benefits from the rise in household income.
“Private consumption among locals has not gone up much in line with the said increment in household income.
“I also think that the latest median household income is higher because it is inflated by cash handouts, namely, Bantuan Rakyat 1Malaysia (BR1M), which are increased annually,” he said.
To note, BR1M, which was first introduced in 2012, was increased from RM500 for households earning less than RM3,000 to RM1,200 in 2017.
The Malaysian household median monthly income crossed the RM5,000 mark for the first time last year, with the middle 40% (M40) households registering the highest growth in median income, according to the Statistics Department.
In its 2016 Household Income and Basic Amenities survey, the Statistics Department noted that Malaysian households recorded a 6.6% increase per annum in median monthly income to RM5,228 in 2016 compared to RM4,585 in 2014.
Household group-wise, the median monthly income of the bottom 40% (B40), M40 and top 20% (T20) households all rose last year compared to 2014. The B40, M40 and T20 households registered median monthly incomes of RM3,000, RM6,275 and RM13,148 in 2016.
“The household group M40 recorded the highest growth in median monthly income of 6.9% per annum, followed by B40 (6.6%) and T20 (6.2%).
“The median monthly household income in the urban area increased 6.4% per annum from RM5,156 in 2014 to RM5,860 in 2016. Simultaneously, the median monthly household income in the rural area also increased 5.3% per annum from RM3,123 in 2014 to RM3,471 last year,” the Statistics Department said in a statement.
Kuala Lumpur recorded the highest median monthly household income of RM9,073 in 2016, followed by Putrajaya (RM8,275) and Selangor (RM7,225). On the other hand, Kelantan registered the lowest median monthly household income at RM3,079.
The 2016 Household Income and Basic Amenities survey also found that inequality among Malaysians had reduced further last year, as the benchmark Gini coefficient recorded a decline to 0.399 from 0.401 in 2014. The decline indicated an improvement in the Malaysian household income distribution.
In addition, the country’s overall incidence of poverty improved from 0.6% in 2014 to 0.4% last year.
“Poverty incidence in the urban and rural areas depicted the same trend, whereby it decreased to 0.2% and 1%,” said the Statistics Department.
