FACULTY OF ACCOUNTING

DIPLOMA IN ACCOUNTING ( AC110 )

ESSENTIALS OF ECONOMICS ( ECO162 )

ASSIGNMENT : NEWS ARTICLE FOR EXCEPTIONAL DEMAND

GROUP : MAC1101K

PREPARED BY :

ZAIDATUL ADAWIYAH BINTI ZAINI ( 2022834064 )

NUR’AIN BINTI MUHAMMAD NASHIRRUDDIN ( 2022663036 )
SITI RODHIAH BINTI ZAHID ( 2022600994 )
NUR DINA ARISHA BINTI MOHD ROSHDI ( 2022874738 )
IFFAH SALWA BINTI MUSTHAFA ( 2022839718 )
FATIN MARDHIAH BINTI ABU BAKAR ( 2022886578 )

PREPARED FOR :
MADAM JUMAELYA JOGERAN
DATE :
20 JANUARY 2023
High inflation in the future is biggest risk to Malaysian Economy
Difah Rania Hassan Malaysia's inflation, as measured by the consumer price index (CPI), increased 2.8% in May 2022 from a year earlier, led by food's price rise

www.dailynews.com of 5.2%, according to the Department of Statistics Malaysia (DOSM) on Friday (June 24). The country's CPI rise accelerated to 2.8% in May 2022

from the 2.3% year-on-year increase in April 2022. "Food inflation continued to rise to a new high of 5.2%, the highest since November 2011

The biggest risk to Malaysia’s economic growth is high inflation in food prices in the
with 93% of items in this group recording increases," DOSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin said in a statement. “Meanwhile,

future, which may dampen the potential upside to the country’s economic recovery. In
other groups except communications also recorded increases and led to higher headline inflation of 2.8%. Transport increased 3.9%, followed by

Malaysia, food price spikes have recently made headlines. The causes are varied, from
restaurants & hotels (3.7%); furnishings, household equipment & routine household maintenance (2.9%); miscellaneous goods & services (1.9%);

bottlenecks in supply chains and skyrocketing commodity prices to global energy

and recreation services & culture (1.8%). Other than that, housing, water, electricity, gas & other fuels registered an increase of 1.2% [while]

problems and dire shortages due to the pandemic. Unfavorable weather conditions have
education increased 1%. Both groups — alcoholic beverages & tobacco and health — inclined marginally by 0.4% respectively. The

also added to the situation. communications group remained unchanged from the same period of the preceding year,” Mohd Uzir said. The DOSM said in its statement that

Inflation is the rate of increase in prices over a given period of time. Inflation is

the prices of food at home and food away from home rose 5.5% and 5.1% respectively in May 2022 from a year earlier.
typically a broad measure, such as the overall
increase in prices or the increase in the

cost of living in a country. Inflation has become a worry around the world due to

concerns over the effects of persistently high prices on the economy. An increase

caused by strong domestic demand, high commodity prices and disruptions in global

Lecturer
supply chains. The demand for goods and services in the market increased dramatically

at Accounting
which could not be accommodated by the supply and offer by suppliers, traders and

Faculty,
sellers at that time. Finally, traders and sellers have no other choice, forced to raise the

Universiti Teknologi
price of goods and service charges to meet the high demand among their customers. The

MARA (UITM)
value of the Malaysian ringgit continues to fall and most essential goods have to be

Alor Gajah
imported as the value of the ringgit continues to depreciate. Cost of operation,
production, distribution increased. The cost of labour increases and the cost of raw
materials also increases. As a result of

inflation, employers are also forced to fire employees or there is no increase in wages due to higher expenses to be borne.
The negative effects of inflation where if the inflation rate is high, it will increase the cost of living and reduce the

standard of welfare of the community because the increase in the general price level reduces the income of the community

and reduces the purchasing power of consumers. Naturally, purchasing power will decline due to inflation. With rising

prices, it is impossible to have the same purchasing power of goods and services as before. For example, roti canai which was

sold at a price of RM0.70 a piece 5 years ago is now sold at a price of RM1.20 a piece in most eateries. The fall in the value

of the national currency also leads to an increase in inflation. Imported goods will become more expensive. The producers

Tim Lang, emeritus professor of food policy at City, University of London, said both developed and developing countries were seeing the

will take the opportunity to transfer the cost of imported components, including the cost of raw materials, to the consumer

impacts of years of increasing distortion in food markets. “We are not giving enough attention to food – there’s a lot of attention on the energy

country. This will also result in an increase in the price of goods against household income and a decrease in the value of

markets, but not so much on food,” he said. The concentration of power in the hands of a few secretive companies made for a less transparent

wages. Such cost push pressure may be managed through non-financial measures such as fuel subsidies, price ceilings for

market, so it was hard to judge whether or where profiteering or dangerous speculation was happening. But this was just one aspect of a food

essential goods and through continuous efforts to increase food supply. This means, the way the government uses non-

system that was not working in the interests of consumers or farmers, he said. “We need to rethink the food system. People can’t afford a healthy

monetary measures to keep prices under control will have a bearing on inflation in the future.
diet, and this is a very serious problem. A lot of people are making a huge amount of money out of food, but food producers get about 8% of the

RM 1,328 a year we spend on food,” he said.