BNM: Food prices up 17.5pc since 2020 but wages lag, fuelling Malaysia's cost-of-living strain

Malay Mail

4 hours ago

KUALA LUMPUR, June 17 — Controlling inflation alone is insufficient to alleviate cost-of-living pressures, said Bank Negara Malaysia (BNM), highlighting the urgent need for structural reforms to address stagnant wage growth and ensure that incomes keep pace with rising prices.
Deputy Governor Datuk Marzunisham Omar said that although headline inflation has eased significantly due to timely monetary policy tightening, price levels remain elevated, thereby reducing household purchasing power amid moderate wage growth.
'From the first quarter of 2020 (1Q 2020) to the 1Q 2025, the Consumer Price Index cumulatively increased by 9.8 per cent, while prices for food and beverages rose even higher at 17.5 per cent.
'In contrast, nominal private sector wages per worker increased by only 7.9 per cent over the same period...So, in real terms, wages per worker declined by 1.9 per cent, hence why we are feeling the pressure of the rising cost of living,' he said.
Marzunisham said this during a panel session on the topic 'Managing Inflation, Easing Cost: A Policy Perspective' at the Sasana Symposium 2025 hosted by BNM today.
He pointed out that while it is commonly argued that wages should reflect productivity, data from the 1Q 2022 to 2Q 2025 revealed that productivity per worker rose by 7.4 per cent, yet real wages declined during the same period.
'This clearly illustrates, particularly at the micro level, a structural misalignment between productivity gains and wage growth,' he added.
Meanwhile, he said Malaysia should focus on creating more high-paying and skilled jobs. This is where investments come into the picture, and attracting the right kind of investment is crucial to creating high-skilled jobs that lead to high income.
He highlighted that Malaysia recorded very encouraging investment approval numbers in 2023 and 2024, and the percentage of high-skilled jobs in the economy increased to about 30 per cent, an increase from 25 per cent a few years ago.
Marzunisham said that attention must also be given to the supply side, where policy interventions are necessary, noting the ongoing concerns from employers regarding the quality of graduates entering the labour market.
'Between 2022 and 2023, around 260,000 fresh graduates entered the job market. However, only about 150,000 high-skilled jobs were created annually during that period, resulting in a gap of nearly 100,000.
'That's why we see underemployment among graduates remaining high — about 36 per cent of our graduates are working in mid- or low-skilled jobs, simply because they cannot secure high-skilled employment,' he said.
Additionally, he noted that employers are complaining that they cannot find the right skilled workers, which underscores the need to improve training and address the skill mismatch among fresh graduates.
He also pointed out that some countries have adopted differentiated minimum wages based on skill levels, and emphasised the need to focus on the broader ecosystem that shapes how wages are determined.
Marzunisham also highlighted that some countries have introduced differentiated minimum wages, where the minimum wage is set according to skill levels, adding that another focus area should be the overall ecosystem of how wages are determined.
'The collaboration and engagement between employers, employees, and government unions, for example, is important, so that all these actors, all these participants, come into engagement in deciding how wages should be increased in the country, rather than leave it to the public forces,' he said. — Bernama