RECENTLY, Mercer’s Total Remuneration Survey for 2023 projected that the average salary in Malaysia is anticipated to increase by 5.1% this year. This news may come as a relief to many as it suggests that their salaries can keep up with the rising cost of living.

However, the inflation rate is expected to rise concurrently as Malaysia’s purchasing power increases. This may imply that Malaysia’s real wages do not experience growth if the percentage increase in the inflation rate matches that of the wages.

What is worrying is that other issues may arise and often receive minimal attention. For example, individuals who do not receive any salary increases, especially farmers in rural areas, may lag behind. They will struggle to survive the inflation. Therefore, the poor will become poorer.

As a result, the income inequality may widen. The poverty line may also rise due to inflation, putting many households at risk of falling below it.

The national poverty line stood at RM2,589 per month in 2022. However, households earning above this line previously and not experiencing salary increases may find themselves falling below the poverty line due to inflation.

Additionally, university students reliant on study loans may grapple with the increased cost of living because the price of food may escalate. Some of them may even decide to drop out of their studies or take up part-time jobs to cope with these financial challenges.

Therefore, it is imperative to adopt a targeted and inclusive approach to alleviate the negative impacts of inflation on diverse socioeconomic groups.

By prioritising the needs of those who do not benefit from increased salaries, the government can contribute to a more equitable and sustainable economic landscape.

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