1. SHD 1123 PRINCIPLES OF
MACROECONOMICS
SEMESTER 2 2008 /2009
GROUP ASSIGNMENT
TOPIC: QUESTION 2
LECTURER: PROF. DR. ABDUL AZIZ BIN BUANG
SECTION: 04
GROUP MEMBERS:
YEOH SIEW CHING
TAN KHER XIAN
TAN SUE LING
TEH JA YING
1
2. The Consumer Price Index (CPI) is a measure of the average change over time in the
prices paid by urban consumers for a market basket of consumer goods and services. Speaking
of CPI, there are variations there also. CPI-U represents the index for all urban consumers and
is the most commonly used index for escalation of taxes, wages, etc. Then there is the CPI-W,
the CPI for urban wage earners and clerical workers. There are major uses of CPI such as an
economic indicator, as a deflator of other economic series and as a means of adjusting dollar
values.
The CPI reflects spending patterns for each of two population groups: all urban
consumers and urban wage earners and clerical workers. It is based on the expenditures of
almost all residents of urban or metropolitan areas, including professionals, the self-employed,
the poorer, the unemployed, and retired people, as well as urban wage earners and clerical
workers. The spending patterns of people living in rural non-metropolitan areas, farm families,
people in the Armed Forces, and those in institutions, such as prisons and mental hospitals are
not included in the CPI. Consumer inflation for all urban consumers is measured by two
indexes, namely, the Consumer Price Index for All Urban Consumers (CPI-U) and the
Chained Consumer Price Index for All Urban Consumers (C-CPI-U).
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is
based on the expenditures of households included in the CPI-U definition that also meet two
requirements which are more than one-half of the household's income must come from clerical
or wage occupations, and at least one of the household's earners must have been employed for
at least 37 weeks during the previous 12 months.
The CPI frequently is called a cost-of-living index, but it differs in important ways
from a complete cost-of-living measure. A cost-of-living index is a conceptual measurement
goal, however, and not a straightforward alternative to the CPI. A cost-of-living index would
measure changes over time in the amount that consumers need to spend to reach a certain
utility level or standard of living. Both the CPI and a cost-of-living index would reflect
changes in the prices of goods and services, such as food and clothing that are directly
purchased in the marketplace; but a complete cost-of-living index would go beyond this role to
2
3. also take into account changes in other governmental or environmental factors that affect
consumers' well-being. The proper treatment of public goods is very difficult to determine, for
example, safety and education, and other broad concerns, such as health, water quality, and
crime, which would constitute a complete cost-of-living framework.
CPI not necessarily measure an experience with price change but it is important to
understand that BLS bases the market baskets and pricing procedures for the CPI-U and CPI-
W populations on the experience of the relevant average household, not of any specific family
or individual. It is unlikely that your experience will correspond precisely with either the
national indexes or the indexes for specific cities or regions.
The CPI represents all goods and services purchased for consumption by the reference
population (U or W) BLS has classified all expenditure items into more than 200 categories,
arranged into eight major groups. Major groups are food and beverages and examples of these
categories are breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks and
others. Next group is housing such as rent of primary residence, owners' equivalent rent, fuel
oil, bedroom furniture. Then group of apparel as men's shirts and sweaters, women's dresses,
jewelry. Transportation is also one of the major groups, for example new vehicles, airline
fares, gasoline, motor vehicle insurance. Besides, medical care include prescription drugs and
medical supplies, physicians' services, eyeglasses and eye care, hospital services are inside the
groups. Recreation such as televisions, toys, pets and pet products, sports equipment,
admissions are in groups too. Education and communication are important too. It includes
college tuition, postage, telephone services, computer software and accessories. Last groups
are other goods and services such as tobacco and smoking products, haircuts and other
personal services, and also funeral expenses.
Certain taxes are included in the CPI, namely, taxes that are directly associated with
the purchase of specific goods and services such as sales and excise taxes. Government user
fees are also included in the CPI. For example, toll charges and parking fees are included in
the transportation category, an entry fee to a national park would be included as part of the
admissions index, water and sewerage charges and auto registration fees. In addition, property
taxes should be reflected indirectly in the BLS method of measuring the cost of the flow of
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4. services provided by shelter, which we called owners' equivalent rent, to the extent that these
taxes influence rental values. However, the CPI excludes taxes (such as income and Social
Security taxes) which is not directly associated with the purchase of consumer goods and
services. For certain purposes, one might want to define price indexes to include, rather than
exclude, income taxes. Such indexes would provide an answer to a question different from the
one to which the present CPI is relevant, and would be appropriate for different uses. The CPI
does not include investment items, such as stocks, bonds, real estate, and life insurance. These
items are related to savings and not to day-to-day consumption expenses.
Each month, BLS data collectors called economic assistants visit or call thousands of
retail stores, service establishments, rental units, and doctors' offices, all over the country, to
obtain information on the prices of the thousands of items used to track and measure price
changes in the CPI. During each call or visit, the economic assistant collects price data on a
specific good or service that was precisely defined during an earlier visit. If the selected item
is available, the economic assistant records its price. If the selected item is no longer available,
or if there have been changes in the quality or quantity (for example, eggs sold in packages of
ten when they previously were sold by the dozen) of the good or service since the last time
prices were collected, the economic assistant selects a new item or records the quality change
in the current item. They check the data for accuracy and consistency and make any necessary
corrections or adjustments, which can range from an adjustment for a change in the size or
quantity of a packaged item to more complex adjustments based upon statistical analysis of the
value of an item's features or quality. Thus, commodity specialists strive to prevent changes in
the quality of items from affecting the CPI's measurement of price change.
Although CPI is widely used, it still has the drawbacks of using the CPI as a
measurement of the rate of inflation. There are two basic types of limitations in measurement
which are sampling errors and non-sampling errors. Sampling errors is due to the CPI
measures price changes based on a sample of items, the published indexes differ somewhat
from what the results would be if actual records of all retail purchases by everyone in the
index population could be used to compile the index. These estimating or sampling errors are
limitations on the accuracy of the index and not mistakes in calculating the index. The CPI
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5. program has developed measurements of sampling error, which are updated and published
annually on the CPI home page. The CPI sample design allocates the sample in a way that
maximizes the accuracy of the index, given the funds available.
Then, for non sampling errors are errors occur from a variety of sources. Unlike
sampling errors, they can cause persistent bias in measurements of the index. Non sampling
errors are caused by problems of price data collection, logistical lags in conducting surveys,
difficulties in defining basic concepts and their operational implementation, and difficulties in
handling the problems of quality change. Non sampling errors can be far more hazardous to
the accuracy of a price index than sampling errors. Hence, BLS expends much effort to
minimize these errors. Highly trained personnel ensure the comparability of quality of items
from period to period, collection procedures are extensively documented, and recurring audits
are conducted. The CPI program has an ongoing research and evaluation program in order to
identify and implement improvements in the index.
The CPI is subject to both limitations in application and limitations in measurement.
Limitations of application are the CPI may not be applicable to all population groups. Also,
the CPI does not produce official estimates for the rate of inflation experienced by subgroups
of the population, such as the elderly or the poor. BLS does produce and release an
experimental index for the elderly population. However, because of the significant limitations
of this experimental index, it should be interpreted with caution.
The CPI cannot be used to measure differences in price levels or living costs between
one place and another as it measures only time-to-time changes in each place. A higher index
for one area does not necessarily mean that prices are higher there than in another area with a
lower indexed. It merely means that prices have risen faster in the area with the higher index
since the two areas' common reference period. The total change in living costs cannot use CPI
as a measurement because changes in these costs are affected by those are beyond the
definitional scope of the index and so are excluded, for example the social and environmental
changes and changes in income taxes.
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6. One of the most important economic concepts is inflation. At its most basic level,
inflation is simply a rise in prices. Over time, as the cost of goods and services increase, the
value of a dollar is going to go down because you won't be able to purchase as much with that
dollar as you could have last month or last year. Of course, it seems like the cost of goods are
always going up, at least to an extent, even when inflation is thought to be in check.
Consumer Price Index, or the CPI used to measure inflation. The CPI is a measure of
the price of a set group of goods and services. The "bundle," as the group is known, contains
items such as food, clothing, gasoline, and even computers. There are certain items in the
bundle used to measure the CPI that are extremely volatile, such as gasoline prices. By
eliminating the items that can significantly affect the cost of the bundle (in either direction) on
a month-to-month basis, the Core rate is thought to be a better indicator of real inflation, the
slow, but steady increase in the price of goods and services. Malaysia with its subsidies does
not escape the rising international price levels of food and fuel. The Consumer Price Index,
CPI which is the most widely used indicator and measure of inflation in Malaysia have shows
us on the surface that inflation is under control.
The value of money does not remain the same when there is inflation. The value of our
ringgit is observed in what it can buy which means its’ purchasing power. In theory, there are
two causes of inflation: Demand-Pull inflation – Too much money not enough goods. In
economic terms demand is growing faster than supply. However, in real world there are more
than two products so the average price of goods and services is the indicator. Cost-Push
Inflation – When cost to produce goes up, companies have to increase price to maintain profit
margin. Increase cost includes wages, taxes or increased costs of imports. Back in December
2007 prior to general election, our government has decided to increase the salary of public
servant. This means more purchasing power for public servant and for all of us that do the
grocery shopping we can see the price increase in our shopping bill. Cost of fuel (petrol) goes
up recently which resulting in pretty much all items go up because increase in transportation
cost of delivering items. Since all items goes up, the salary are bound to go up because the
ringgit that we have no longer purchase the same items it used to and thus we have Cost-Push
Inflation.
6
7. The beginning of the decade of 1970's saw the emergence of increasing inflationary
pressures in the economy. The increase in consumer price was more pronounced during the
first half of the decade, 1971-75, when the CPI rose at an average rate of 7.3% per annum as
against 4% per annum during 1976-79. The rapid increase in the price level during 1971-75
periods was due to the large increases registered in 1973 and 1974 of 10.5% and 17.4%,
respectively. These price increases were generated by a number of factors. In the world
economy, especially in the industrialised countries, the industrial boom of 1973 increased
aggregate demand well beyond the supply capacity leading to pressure on prices. The oil price
increase of 1973 and the shortage of food supplies following crop failures in a number of
major food producing countries aggravated the situation. This world economic condition led to
a sharp build-up of inflationary pressures which consequently led to sharp increases in the
price of imports.
The rate of domestic inflation slowed down considerably in 1975 when the CPI rose by
only 4.5%. This was the result of an improvement in the international inflationary situation as
well as a response to the government anti-inflationary measures implemented in the previous
years. During 1976-79, the CPI rose at an average annual rate of 4%, marked by considerable
year-to-year variations. While the CPI as a whole did not increase much, some sub-groups of
the index continued to exhibit rapid rates of increase. This was due in large part to the
government's price control of essential food items such as rice, sugar and milk. As a
consequence of these measures, Malaysia enjoyed relative price stability and its rate of
inflation was considerably lower than that experienced by most other countries. In all its
efforts, the government was conscious of the debilitating impact which inflation has on the
economy's ability to mobilise savings and encourage investment, and particular efforts were
made to protect the poor from the burden of inflation.
Year Inflation, average consumer prices
1970 1.9
1971 1.7
1972 3.4
1973 10.6
1974 17.3
1975 4.6
1976 2.4
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8. 1977 5.0
1978 4.8
1979 3.7
1980 6.724
1981 9.7
1982 5.834
1983 3.704
1984 3.904
1985 2.587
1986 0.35
1987 0.737
1988 0.29
1989 2.557
1990 3.043
1991 4.358
1992 4.767
1993 3.561
1994 3.701
1995 3.202
1996 3.479
1997 2.655
1998 5.293
1999 2.731
2000 1.551
2001 1.427
2002 1.793
2003 1.074
2004 1.42
2005 3.049
2006 3.59
2007 2.106
2008 2.43
Malaysia has a remarkable record of maintaining a low and stable price environment.
On average, headline CPI in Malaysia increased by 3.6 per cent per year in 1980s. During the
oil shock in the early 1980s, CPI peaked at 9.7 per cent from 4 per cent before the shock.
Despite its robust economic growth in 1980s and 1990s, Malaysia’s inflation rate had been
relatively low by international standards.CPI in Malaysia increased by 3.7 per cent per year in
the 1990s. Oil shocks in 1980s and 1990s affected consumer price inflation rate in Malaysia.
8
9. Similarly, CPI began to trend upwards in the late 1980s and peaked at 4.7 per cent in 1992
because of the higher oil prices in the early 1990s due to the Gulf War.
In the second half of 1997, Malaysia was struck by the Asian financial crisis, which
contributed to a severe deterioration in its economic performance in 1998. A 40 per cent fall in
the value of the ringgit currency against the US dollar since July 1997 has driven up the price
of imported goods. Over the first seven months of the year, the CPI rose 5.2 per cent compared
with the same period in 1997. The annual inflation rate as measured by the consumer price
index (CPI) stood at 5.8 per cent in July 1998. Earlier this year, the 1998 inflation rate was
expected to be between seven and eight per cent, up sharply from 2.7 per cent last year.
However, with the economy in a tailspin, pressure on prices appears to be less severe than
authorities had feared, giving the central bank, which had long stood by high interest rates to
keep inflation in check, room to ease monetary policy. Many economists now expect the
annual inflation rate to range between five and six per cent in 1998, fully two percentage
points below the central bank's projection. While some trade barriers were raised
“temporarily” in the wake of the Asian financial crisis, certain restrictions on foreign direct
investment (FDI) were at the same time relaxed, also temporarily. In addition, the
Government, by promoting corporate and financial restructuring, has taken steps to address
structural weaknesses that became more evident during the crisis. Nonetheless, there are
several barriers to trade and investment that still constitute potentially important distortions to
competition and thus potential impediments to Malaysia's long-term development.
9
10. Even after the severe regional financial crisis and sharp depreciation of the ringgit in
1997/98, Malaysia’s inflation rate has been contained at a relatively low level. In 2000,
Malaysia’s consumer prices increased only by 1.6 per cent and by 1.4 per cent in 2001. In
2002, Malaysia’s consumer prices registered a mild increase when the CPI rose from 1.1 per
cent in January to 2.1 per cent in June and July this year.
The low inflation environment was due to the absence of cost push and demand pull
inflationary pressure. In addition, the low inflation environment was also due to other factors
such as the stability of the ringgit peg and low imported inflation from Malaysia’s major
trading partners such as the US, EU and Japan.
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11. In 2004, the average inflation rate was relative low which was 1.42. Several factors
will continue to support a low and stable inflation environment in Malaysia. First of all, there
is no major resource bottlenecks in the economy as economic activity in Malaysia is expected
to continue to grow in line with the country's potential growth. While monetary and fiscal
policies remain prudent. The growth in money base remains consistent with a low inflation
outlook. As such, there are no threats from the monetary policy that could create a situation of
too much money chasing after too few goods. In addition, fiscal policy remains prudent and
the Government is on track to achieve its objective of fiscal consolidation. Also, the liberal
trade regime in Malaysia will continue to support a low inflation environment. From year to
year, the Government continues to liberalise trade by reducing import tariffs in order to reduce
cost of doing business in Malaysia. This will not only help maintain competitive price
environment, but also boost Malaysia's competitiveness. Finally, stability in the ringgit which
is pegged to the US dollar will continue to provide a stable price environment. Much of the
speculations that the peg would result in high inflation when it was first introduced in 1998 did
not materialise. Thus, under these circumstances, the outlook for low and well-behaved
inflation will remain and this will continue to support broad-based economic activities in the
country.
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12. Not withstanding the escalating oil prices, inflation remained at manageable levels in
2005. The consumer price index (CPI) rose by 3% in 2005, driven mainly by adjustments to
administered prices. The cost-push price increase was mainly seen in the transport and
communication category as the CPI peaked at 3.7% in August, before trending lower to 3% by
end-2005. The staggered adjustments to retail petrol and diesel prices and the partial
absorption of the price increases by producers due to competition moderated the increase in
domestic prices. In addition, greater efficiency of energy usage and continued improvements
in productivity helped contain price pressures. As a result, core inflation, or inflation as a
result of demand pressures, remained low at 2%. Malaysia's economic growth strengthened in
the second half of 2005 and is expected to gain momentum in 2006. It may exceed last year's
targeted 5 percent to 5.5 percent. Despite the small quantity of observation since the end of the
Ringgit peg to the US dollar (July 2005 to June 2006), the recorded average inflation, around
3.6%, is to some extent closer to the previous managed float levels than to the exiting regime.
Malaysia's consumer price index (CPI) shows inflation hit a nine-month high in
November [2007] and looks like it is accelerating. Figures released by the Statistics
Department show November's inflation rate jumped to 2.3%, from 1.9% in October. The rise
was driven largely by a 3.8% surge in the price of food and soft drinks - the biggest in two
years and a direct result of the higher global prices of flour, cereal and dairy products. A
Deutsche Bank survey two years ago calculated that the real rate of inflation in the Klang
Valley was closer to 8%. Inflation will gain impetus next year because of pending increases in
the prices of fuel and public transport. Price rises could also put pressure on the government,
which is likely to call a general election next year. Fuel prices will be a particularly tricky
problem for the government. They are being reviewed, and while details so far have been
sketchy, most analysts reckon fuel could go up by at least 20-30 sen (9-13 Singapore cents).
The government has already announced toll rate hikes on six highways ranging from 9-50%.
The upshot of all this, according to investment bank CIMB, is an inflation rate of 3.3-3.8% in
2008.
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13. The CPI basket includes those goods and services which are important in terms of the
size of the expenditures made by Malaysian households. It is neither practical, nor necessary,
to include all the items that consumers buy since many items show similar price changes.
Hence, by selecting representative items (or samples) carefully, it is possible for the index to
reflect price changes for a much wider range of goods than just those observed directly.
In Malaysia, the present practice is to have CPI reviews every five years or so.
Following each review, which involves revising the list of items and revising the weights of
the items, the new series are linked to the old to form a continuous series. This linking is
carried out in such a way that the resulting continuous series reflect only price changes and not
differences in the prices of the old and new basket.
According to the Graph 1, Consumer Price Index ( Benchmarked 1980 = 100 ) for Malaysia,
Consumer Price Index for Food, Beverages and tobacco, Clothing and footwear, Gross rent, fuel and
power, Furniture, furnishing and household equipment and operation, medical care and health
expenses. Because of 1980 CPI is 100; therefore we use 1981 to compare with 1985. For 1985, a hike
of index 122.1 can be seen on Food as compared to 1981 which bears only 111.5 with the percentage
change 9.5%. Where else, for beverages and tobacco there is also a hike from 113.4 in 1980 to 152.5
in 1985 with the percentage 34.4%. A rise of clothes and footwear of 108.3 in 1981 to 120.6 in 1985
with the percentage 11.4%. While for Gross rent, fuel and power the CPI for the year of 1981 is
109.7 is increase to 138.7 in year 1985 with the percentage change 26.4%. Besides that, furniture,
furnishing and household equipment and operation also increase from 106.1 in year 1981 to 113.3 in
1985 with the percentage change 6.8%. Finally for the group of medical care and health expenses,
there is also a hike between these two years which is 133.2 as compared with 108.6 in year 1981 with
the percentage change 22.7%.
Consumer Price Index ( Benchmarked 1980 = 100 ) for Malaysia, Consumer Price
Index for Food, Beverages and tobacco, Clothing and footwear, Gross rent, fuel and power,
Furniture, furnishing and household equipment and operation, medical care and health
expenses. In this schedule we will compare for the year of 1985 and 1990. For 1990, a hike of
index 136.6 can be seen on Food as compared to 1985 which bears only 122.1 with the
percentage change 11.9%. Where else, for beverages and tobacco there is also a hike from
152.5 in 1985 to 176.6 in 1990 with the percentage change 15.8%. A rise of clothes and
footwear of 120.6 in 1985 to 128.6 in 1990 with the percentage change 6.6%. While for Gross
13
14. rent, fuel and power the CPI decrease from 138.7 in 1985 to 135.6 in 1990 with the percentage
change -2.2%. Besides that, furniture, furnishing and household equipment and operation is
increasing with the index of 113.3 in 1985 to 124.2 in 1990 with the percentage change 9.6%.
Lastly for the group of medical care and health expenses, there is also a hike between these
two years which is 144.3 as compared with 133.2 in year 1985 with the percentage change
8.3%.
Consumer Price Index ( Benchmarked 1980 = 100 ) for Malaysia, Consumer Price
Index for Food, Beverages and tobacco, Clothing and footwear, Gross rent, fuel and power,
Furniture, furnishing and household equipment and operation, medical care and health.
In this schedule, we will compare the structure year of 1990 and 1995. For the item of
Food, there is an increase which is 136.6 increases to 172.4 in year 1995 with the percentage
change 26.2%. While for the items of beverages and tobacco there is a high increase from
176.6 in 1990 to 254.9 in 1995 with the percentage change 44.3%. A rise of clothes and
footwear from 128.6 in 1990 to 140.2 in year 1995 with the percentage change 9%. We can
also see the rise in Gross rent, fuel and power from 135.6 in 1990 to 158.9 in year 1995 with
the percentage change 17.2%. Furniture, furnishing and household equipment and operation
Year Total Food Beverages Clothing Gross Furniture, Medical
and Tobacco And Rent, Fuel Furnishing, Care And
Footwear And Household Health
Power Equipment And Express
Operation
1980 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1981 109.7 111.5 113.4 108.3 109.7 107.1 108.6
1982 116.0 120.0 120.8 112.7 116.9 109.3 114.5
1983 120.3 120.9 146.0 116.8 124.9 112.2 128.3
1984 124.6 125.1 151.0 119.2 133.3 113.2 130.0
1985 125.1 122.1 152.5 120.6 138.7 113.3 133.2
1986 125.8 122.4 155.0 121.2 140.0 114.0 135.1
1987 126.8 121.8 165.9 121.7 139.0 115.4 136.3
1988 130.0 126.4 168.4 124.3 136.2 118.7 138.3
1989 133.7 131.1 170.7 126.4 135.1 122.0 140.6
1990 137.8 136.6 176.6 128.6 135.6 124.2 144.3
1991 143.8 143.2 190.5 136.5 139.8 129.7 151.9
1992 150.6 152.6 206.9 140.6 144.9 133.2 157.3
1993 155.9 156.0 237.5 141.3 149.9 134.9 165.4
1994 161.7 164.3 249.3 140.2 153.6 137.1 170.9
1995 167.2 172.4 254.9 140.2 158.9 141.0 176.0
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15. for the year of 1990 is 124.2 increases to 141.0 in the year of 1995 with the percentage change
13.5%. And the last item is medical care and health expenses, the schedule shows increase
from year 1990 is 144.3 increases to 176.0 in year 1995 with the percentage change 22%.
Below are the schedule and the graph that shows the different.
Food
Beverage and Tobacco
Clothing and Footwear
Gross rent, Fuel and Power
Furniture, Furnishing, Household Equipment and Operation
280
260
240
220
200
180
160
140
120
100
80
1980 1985 1990 1995
GRAPH 1
According to the Graph 2, Consumer Price Index ( Benchmarked 1994 =100 ) for
Malaysia, Consumer Price Index for Food, Beverages and tobacco, Clothing and footwear,
Gross rent, fuel and power, Furniture, furnishing and household equipment and operation,
Medical care and health expenses. We will now examine the increases or fluctuation of CPI in
between the year of 1995 and 2000. CPI for Food in the year of 1995 is 104.9 and rise up to
134.1 in year 2000 with the percentage change 27.8%. In addition, for the item of Beverage
and tobacco, it also rises to 122.7 in year 2000 as compared to the year of 1995 with the index
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16. of 102.3 with the percentage change 19.9%.Besides, for the group of clothing and footwear,
the graph shows decreasing which is decrease from index 100.0 to 95.5 with the percentage
change -4.5%. Meanwhile, for the group of Gross rent, fuel and power the graph shows
increasing from 103.4 to 118.4 with the percentage change 14.5%. For 2000, a hike of index
109.5 can be seen on Furniture, furnishing and house equipment as compared to 1995 which
bears only 102.8 with the percentage change 6.5%. While for the CPI of medical care and
health expenses shows increasing from 103.1 to 123.6 with the percentage change 19.8%
Year Total Food Beverages Clothing Gross Furniture, Medical
and And Rent, Furnishing, Care
Tobacco Footwea Fuel Household And
r And Equipment Health
Power And Express
Operation
1994 100.0 100.0 100.0 100.0 100.0 100.0 100.0
1995 103.4 104.9 102.3 100.0 103.4 102.8 103.1
1996 107.0 110.9 104.6 99.3 106.7 103.9 106.9
1997 109.9 115.5 106.0 98.8 110.1 104.0 110.7
1998 115.7 125.8 110.6 99.2 114.9 108.1 117.6
1999 118.9 131.6 119.3 97.2 116.7 109.5 121.2
2000 120.7 134.1 122.7 95.5 118.4 109.5 123.6
Consumer Price Index (1994=100) by Main Groups, 1994 – 2000
16
17. Food
Beverages and Tobacco
Clothing And Footwear
Gross Rent, Fuel And Power
Furniture, Furnishing, Household Equipment And Operation
Medical Care And Health Express
140
130
120
110
100
90
80
1995 1996 1997 1998 1999 2000
GRAPH 2
According to the Graph 3, Consumer Price Index ( Benchmarked 2000 =100 ) for
Malaysia, Consumer Price Index for Food, Beverages and tobacco, Clothing and footwear, Gross
rent, fuel and power, Furniture, furnishing and household equipment and operation, Medical care
and health expenses. Because of year 2000 is used as benchmarked, hereby it is wise to use 2001
to compare with year 2005. All of items shows positive sign which is increasing except for the
item Clothing and footwear is decreasing, index for 2001 is 97.4 and decrease to 90.4 in year 2005
with the percentage change -6.9%. For the item of Food, as compare to 2001 CPI for 2005 are
108.8 with the percentage change 8.04%. As for item Beverage and tobacco, it shows increasing
from 104.8 for 2001 increase to 132.3 in 2005 with the percentage change 26.2%. Meanwhile for
the item of Gross rent, fuel and power, it shows increasing too, from 101.4 to 105.2 in year 2005
with the percentage change 3.7%. An item of furniture, furnishing household equipment and
operation shows slightly changes only which is 100.1 to 101.5 in year 2005 with the percentage
change 1.4%. Lastly for the items of medical care and health expenses increase from 102.9 to
110.4 with the percentage change 7.3%.
17
18. Consumer Price Index (2000=100) by Main Groups, 2000 – 2005
Year Total Food Beverages Clothing Gross Furniture, Furnishing, Medical
and And Rent, Fuel Household Equipment Care
Tobacco Footwear And And Operation And
Power Health
Express
2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2001 101.4 100.7 104.8 97.4 101.4 100.1 102.9
2002 103.2 101.4 109.2 95.2 102.1 99.7 105.4
2003 104.4 102.7 111.0 95.3 103.0 99.1 107.2
2004 105.9 105.0 119.7 91.6 104.0 99.5 108.7
2005 109.1 108.8 132.3 90.7 105.2 101.5 110.4
Food
Beverages And Tobacco
Clothing And Footwear
Gross Rent, Fuel And Power
Furniture, Furnishing, Household Equipment And Operation
Medical Care And Health Express
140
130
120
110
100
90
80
2000 2001 2002 2004 2005
GRAPH 3
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19. According to the Graph 4, Consumer Price Index (Benchmarked 2005 =100) for
Malaysia, Consumer Price Index for Food, Beverages and tobacco, Clothing and footwear,
Gross rent, fuel and power, furniture, furnishing household equipment and operation and
medical care and health express. Because of year 2005 is used as benchmarked. Hereby it is
wise to use 2006 to compare with year 2008. For 2008, a hike of 113.0 can be seen on Food as
compared to 2006 which bears only 103.4 with the percentage change 9.28%.
As for beverages and tobacco, the CPI also increases from 106.9 to 120.3 in year of
2008 with the percentage change 12.5%. While for the item of clothing and footwear, there is
only a slight decrease which is 98.7 in 2006 and decrease to 97.0 in 2008 with the percentage
change -1.7%. Furthermore, item of Gross rent, fuel and power increasing from 101.5 in 2006
to 104 in 2008 with the percentage change 2.5%.While for furniture, furnishing, household
equipment and operation also shows increase from 101.1 in 2006 to 104.0 in 2008 with the
percentage change 2.9%. Lastly, for item for medical care and health express also show
increasing from 102.1 in 2006 to 105.4 in 2008 with the percentage change 3.2%.
Year Total Food Beverages Clothing Gross Furniture, Medical
and And Rent, Fuel Furnishing, Care And
Tobacco Footwear And Household Health
Power Equipment Express
And
Operation
2005 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2006 103.6 103.4 106.9 98.7 101.5 101.1 102.1
2007 105.7 106.5 115.2 97.3 102.8 102.2 103.7
2008 109.8 113.0 120.3 97.0 104.0 104.0 105.4
19
20. Food
Beverages and Tobacco
Clothing And Footwear
Gross Rent, Fuel And Power
Furniture, Furnishing, Household Equipment And Operation
Medical Care And Health Express
130
120
110
100
90
2005 2006 2007 2008
GRAPH 4
20
