Food inflation burning a hole in household budgets
PETALING JAYA: Malaysian households paid RM100 for food items in 2024, while the same amount of foodstuff could be bought at RM30.90 in 1980 – no thanks to food inflation.
According to a report by the Statistics Department (DOSM), the threefold increase in food prices in the past five decades also saw the purchasing power of Malaysian households decline by 69.1%.
The Food Security report released last month said a big portion of households expenditure went into purchasing daily necessities.
For instance, a B40 household with monthly income below RM5,250 would allocate 71.6% of the expenditure for daily necessities.
An M40 household earning between RM5,250 and RM11,819 would spend 67% while a T20 home earning over RM11,820 allocated 64%.
The F&B segment was one of the main reasons why the Consumer Price Index (CPI) grew by 3.2% between 2010 and 2024.
The price increase influenced spending patterns as basic necessities such as rice, vegetables, chicken, meat and eggs would have become more expensive.
'This would make households reduce their expenditure on non-essential items such as clothing, entertainment and travel to cover the high cost of food.
'All subgroups under the Food & Beverage category recorded a decline in purchasing power ranging from 20.1% to 39.2% between 2010 and 2024,' said the report.
Fish and seafood products are the most affected subgroup, whereby purchasing power had declined 39.2% due to annual inflation averaging at 3.6%.
While prices of goods and services continued to increase, household income was not growing at the same rate, therefore reducing purchasing power. This forces households to make an adjustment to their spending patterns.
'These changes in spending behaviour can lead to a decline in purchasing power and may negatively affect family well-being. Households tend to prioritise essential items, such as food, rent, utility bills and transportation.
'On a monthly basis, the average Malaysian household spent RM841 (16.3%) of their total average monthly household expenditure (RM5,150) on the Food & Beverage category in 2022. This was the highest average expenditure among all categories,' it said.
As inflation in this category rises, it directly burdens households, especially due to the increase in food prices, which affects their daily lives, it added.
As a result, healthy food becomes more costly, prompting households to gravitate towards unhealthy and less nutritious food which is pocket-friendly.
'When food prices increase faster than household income, food security can be significantly affected,' the report said.
'Limited access to food is expected to contribute to a rise in malnutrition, anaemia, diabetes, obesity, and other nutrition-related diseases, as households may be forced to consume unbalanced diets due to affordability issues.'
Geopolitical conflict between Ukraine and Russia, which are major exporters of grains and fertiliser, also had a hand in driving global food inflation.
'These supply disruptions have especially impacted the rising cost of livestock and agricultural inputs, particularly for chicken and vegetables.
'The effects are reflected in the average annual inflation for chicken, which rose by 2.5% (2010-2024), with the highest increase recorded in 2022 at 10.0%.
In addition, unpredictable weather in major chicken feed-producing countries like Brazil, Argentina and India has indirectly influenced feed prices.
Meanwhile, vegetable inflation also rose by an average of 3.2% annually, with the highest increase recorded in 2022 at 5.5%, added the report.
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