By Suhaiza Hanim Mohamad Zailani

The rising cost of living continues to be a major issue for Malaysia’s Bottom 40% income group (B40). Growing living expenses are impacting not only B40 but also both M40 and T20 income categories, as mentioned by Datuk Paul Selvaraj, deputy president of the Federation of Malaysian Consumers Associations (FOMCA).

It was evident when Malaysia experienced 3% to 4% inflation in 2023. Malaysians felt the most impacted category was food prices, which rose 7.2% in the previous year alone. This steep rise had a significantly negative impact on low-income families struggling to make ends meet.

Accordingly, many are finding it increasingly expensive to acquire basic needs. The average monthly income of the B40 group has grown by just 1.5% over the last year, according to a recent study from the Department of Statistics Malaysia (DOSM). This indicates that the group’s income has not kept up with inflation. Economists say more is needed to keep up with growing living expenses.

Another important concern is housing. Many low-income families cannot afford to pay the rent in metropolitan areas, so they are forced into subpar living circumstances due to skyrocketing property costs.

Prime Minister Anwar Ibrahim emphasised the government’s commitment to reducing the consequences of inflation in a recent statement while also acknowledging the difficulties encountered by the B40 group. “We recognise the challenges that the B40 communities confront, particularly in light of the growing housing and food expenses. To lessen the burden on low-income households, our administration is dedicated to enhancing access to reasonably priced essentials and stabilising costs,” Anwar said.

Nevertheless, many households in the B40 report feeling left behind despite government efforts to catch up. Campaigns like Bantuan Sara Hidup (BSH) have offered short-term assistance, but detractors claim that these monetary grants ignore the underlying causes of economic inequality and poverty.

The B40 community is expected to face further hardships due to Malaysia’s widening economic gaps if structural changes are not implemented.

An important aspect that requires consideration is the disparity between economic expansion and income distribution. Though the country’s economy is growing, not every member of society is reaping the benefits of this affluence.

This can be seen when the growing economic disparity between the wealthy and the rest of society has reduced citizens’ purchasing power, especially for those in the middle—and lower-income groups.

Hence, the government needs to give this strategy top priority to guarantee fair and thorough income distribution. This may be done by enacting laws that help people who are in dire financial need, especially those with low and moderate incomes.

When geography, family obligations, school costs, and other factors are considered, many middle-class individuals, or the M40, need more help than a tiny percentage of the B40 group.

Moreover, it is imperative to enhance the effectiveness of the domestic sector, mainly via technological development. Improving productivity in essential industries, including services, industry, and agriculture, is part of this.

Enhancing productivity and the capacity to generate high-quality goods and services will support all-encompassing economic expansion while benefiting the populace by creating jobs and generating more income. It is also crucial to decrease reliance on imported agricultural supplies like onions, rice, and other items.

The government’s ability to communicate clearly and effectively is also important. The citizens must be informed precisely of the steps the government has taken to alleviate their financial strain. As a result, they will be more confident in government attempts to address economic difficulties, and misunderstandings will be reduced.

In short, the government has to adopt a comprehensive strategy to guarantee that Malaysians benefit from the goal of lowering people’s cost of living through the introduction of Budget 2025.

The author is the Director of the Ungku Aziz Centre for Development Studies, Universiti Malaya. She may be reached at shmz@um.edu.my