Kuala Lumpur: The Cost of Living Index, which the government is developing, will include more categories in the basket of items measured, says Datuk Seri Anwar Ibrahim.

These include food and non-alcoholic beverages, clothing, shoes, housing, water, electricity, gas, fuel, home maintenance, healthcare, transport, information and communication, as well as education, among others, the Prime Minister said.

Anwar said the basket of items taken into account by most countries when measuring the cost of living may be limited, and some of these items are usually not factored in.

“The Consumer Price Index (CPI) is not perfect. Current times call for changes. The needs in Kuala Lumpur will not be the same as those in Hulu Terengganu,” he said during the Prime Minister’s Question Time in the Dewan Rakyat yesterday.

Therefore, the index must be altered. Based on a meeting we held in March, we decided that the cost of living indicators had to be in line with current developments,” he added.

The indicator is formed based on the cost of living in 13 states and three federal territories, as well as 162 districts.

It takes into account the Marginal Propensity to Consume and Purchasing Power Parity.

“We admit that there is a problem due to the rising cost of living even before the rationalisation of diesel subsidies,” he said.

“The solution is to increase subsidies for the people who are burdened and affected. Yes, there is a problem with implementation that we have to manage, but don’t forget that there are a lot of cases of leakages and theft (of subsidised items). This includes leakages to fishermen who are foreigners,” he said, adding that the losses could be recouped through stringent enforcement.

He was responding to a question by Datuk Rosol Wahid (PN-Hulu Terengganu) on the update of the indicator to measure the cost of living.

The National Action Council on Cost of Living (Naccol) had agreed in March to allow the Statistics Department Malaysia (DOSM) to develop new indicators to measure the cost of living standards right down to the district level.

These indicators would help the government draft an accurate and effective programme for implementation.

On a separate note, Anwar stated that there has been no decision on subsidy rationalisation for RON95 petrol at this juncture.

“Is there a possibility in the future? I will not rule out any possibilities,” he said, adding that there has been no policy paper tabled so far on expediting the rationalisation process.

He said the government has undertaken subsidy rationalisation for chicken, electricity and diesel.

“These three have been done last year and this year. We see the impact and the reaction of the people. What is more important is that we must stop the subsidies for the rich and foreigners. We have to think of a mechanism so that the people will not be burdened,” he added.

“It has been years, and there was no single government that was willing to do it,” he said in response to a supplementary question from Ahmad Fadhli Shaari (PN-Pasir Mas) on whether the government planned to implement a pullback of subsidies for RON95.

https://www.thestar.com.my/news/nation/2024/07/03/new-cost-of-living-index-to-offer-more-accurate-data