Economic outlook: Who is right – Rahman Dahlan or Mydin boss?

So minister Rahman Dahlan has dismissed Mydin boss Ameer Ali Mydin’s comments that despite Malaysians don’t have money to spend.

He pointed to Malaysia’s strong economic growth, which he said has clearly benefited the people. They now have rising income and purchasing power.

“The economic performance and condition of a country and its people cannot be measured by just one sub-sector, such as the hypermarket industry, alone… This is evident from the fact that private consumption continued to be the biggest contributor [53.2%] to Malaysia’s economy.”

In the contrast, the Mydin boss said many ordinary Malaysians simply don’t have enough cash to cope with the higher cost of living.

“I think people just don’t have money,” Ameer Ali Mydin told BFM. “Let’s go to data. I think end of the day, let’s ask how much prices are going up. Prices have gone up seriously every year. Within this five-year period, prices have gone up over 14%” (according to Mydin’s own data).

Although this might not seem excessive over a five-year period, the rise in prices of individuals items has been “scary”, he said. For example Camerons cabbage rose by 29% over five years, ikan kembung hitam (Indian mackerel) 20%, a popular chilly sauce 39%, and a popular sardine brand 31%.

These hefty price hikes – rather than the 2-3% official inflation rate – are the reality, especially for the lower-income group, who feel the impact the most as they spend a disproportionately higher portion of their income on food.

And higher property prices (some of it due to speculation) have also contributed to the higher cost of doing business, which in turn is passed down to the consumers.

So Rahman may be right that the economy may be growing, but who are the ones benefiting most from this extra wealth? The fat cats, cronies, the well connected developers and the top 1-5% perhaps?

That explains why you see flashy cars around (have you noticed more Porsches on the road?) at a time when many ordinary people can only stare in disbelief at the price tags in the market.

Check out this article I wrote recently: Huge growth in GDP – so why the tough times for many?

By the way, how much are you paying for your char koay teow and wan tan mee now? Perhaps the Char Koay Teow, Cabbage, Sardine and Ikan Kembong Composite Price Index might be a more realistic measure of the economic state of affairs for many households out there.