Consumer Price Index 2012 of 1.3 percent only – Truckload of Bullsh*t?

A reader questioned this previous article of mine…Inflation and Consumer Price Index – All Time Low! … Actually, she questioned the validity of the Y.O.Y (Oct 2012) inflation data by Malaysia Department of Statistics of only 1.3 percent compared to 2012. After all, trust is a rare commodity nowadays, especially if it comes from unsolicited sources or from certain…ahem…parties. Trust No One – as the motto of the old X-Files TV series….well, unless you verified it yourself.

Her exact words:

“Msia 2012 CPI increase only 1.2%?? How to map the following rose of price with the statistic? Kindly enlighten me. In PJ, I encounter the pork noodle (sorry my Muslim readers!) rose from RM5 to RM6, spaghetti rose form RM12 to RM14, which is more than 10% hike ….”

CPI food items oct 2012 how

I know the feeling, Gillian. It’s a pain in the arse when your favourite meal do this to you. Just made you wanna drop the F-bomb right then, right there.

Now, I don’t mean to misled people, and I think DoS doesn’t intend to. Here’s a plausible explanation.

You could go to this exact link – Consumer Price Index Oct 2012

CPI food items weightings oct 2012First, we need to understand the weightings of the overall CPI. For food items, the weight is only at 30.3 percent. The other 70 percent is non-food items. I am not going into details but you get the idea.

Food category alone, as you could observe from here, actually got inflated by 2.0 percent Y.O.Y.

Now the next thing to do is to drill down to the items under the food category.  It didn’t state the exact increase Y.O.Y when it comes to specific food items, but it DOES highlight some of the food items which register notable price hike compared to the month before (Sept 2012).

Apparently, red chillies, cucumber and tomatoes topped the list. What a surprise! And you thought the small plate of chilies that come with your plate of fried rice is complimentary 🙂

CPI food items oct 2012

And I believe some of these food items listed here are the main items used in most dishes – like eggs and chickens. The prices may fluctuate a little in subsequent months, or M.O.M, but I don’t think your hawker auntie is going to serve you cheaper fried rice even if the ingredients price go down. Once increased, it stays there – only goes up, never goes south. Furthermore, to add salt to the wound, if the cost of a plate of rice goes up, say, 7.3 percent, hawker uncle is never going to charge you RM 5 X 1.073 = RM 5.365. He’s going to make it easier for himself (and harder on your pocket) by charging you RM 6. Round it up mah!

Another example (sorry Muslim friends again) – if pork price were to double tomorrow, that means your dim sums, char siew pau, wantan mee and anything remotely with pork essence in it will justify for a price hike of 100 percent.

But, are Muslims going to feel the impact of this?

Hell No!

Correct or not?

Ngam ng ngam?

Tiok ng tiok?

We haven’t talk about personal inflation rate yet.  People complained like no tomorrow (sorry Gillian, I don’t mean you, really 🙂 ) when their favourite meal increase RM 1 or RM 2 bucks, but they have no qualms about upgrading MyVi to Honda City, and then to Prius once they get that big fat incremement or year end bonus. And then they sulked why increment is always so little and money is always not enough.

Think about it, they are the same concept 🙂

Anyway I digress.

So, do you think it makes sense now why your meals are getting more “juice” than the reported, seemingly “bogus” inflation rate?

And…

Should you believe the reported inflation rate reported in the media and apply it literally (or bulat-bulat in Malay 🙂 ) to your daily expenses?

Hell No.

Should you then be happy anyway that the reported inflation rate is lower than the risk-free (aka fixed deposit) rate?

Hell Yes. Imagine if the overall CPI increment is at 10 percent, that means every bloody things you use daily is going to cost you 10 percent more.

Now, can we do anything about the price hike of your favourite meal?

Hell No.

But, can we minimize the impact of the price hike of your favourite meal?

Hell Yes. Eat it less often. After all, that what makes us human. We adapt to things when our surroundings change. Slowly, but surely.

Just realized this is a 12-12-12 post. Auspicious date indeed!

This Post Has 4 Comments

  1. “Trust is a weakness” happens to be the motto of the hacking game Uplink: Hacker Elite (one of my favourite video games, by the way).

    In a way, it’s true. One must do one’s best to verify the veracity of the information received.

    Good post.

    1. Thanks for the kind words. Due diligence is crucial.

  2. Hey KH, thanks for dropping by. Well said, I like your article too – Inflation is Compounding Interest Working Against You

    Cheers
    LCF

  3. Nice view and I agree. What ever published on the rates are skewed. The fool’s way to measure an inflation rate is to peg it with our FD rates. Inflation rate in most cases outpace FD rates. Hence, by peggin’ to FD rates, you get your minumum inflation rate.

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