DISCOVER the Road to Financial FREEDOM!

The average electricity tariff for peninsula Malaysia has raised by 7.12% starting last month. It is  to alleviate Tenaga Nasional Bhd (TNB) from rising of cost burden as cost of electricity supply had been rising over the years.

Without any doubt, almost instantly the food prices, essential products and inflation spiked thereafter. No question about this as it has effect everyone.

A quick check at Supermarket, I notice my favourite breakfast of High 5 cream roll bun is up by RM0. 10 sens from RM0.60.

WOW! That ‘s 17% increase!

High Five White Bread increase RM0.20 from RM2.90.

This’s 7% increase!

You may say 7%  increase is less significant.

But do you know if we keep our money at bank fixed deposit which earned average about 3% per annum, we are in fact losing in purchasing power.

The inflation is killing everyone.

Our reported official inflation rate in Malaysia is  at at 3.3 percent in May of 2011. The average inflation rate in Malaysia was 2.77 percent  from the year 2005 to 2010. On July of 2008, the inflation rate hit to a historical high of 8.50 percent and the lowest is 2.40 percent  in July of 2009

Did your inflation rate is 3.3 percent?

I don’t think so. My favourite breakfast just increase by 17%!

The inflation are derive from a basket of control-price essential products. It is never an accurate figure.

What about RON95 petrol price hike?

Petrol hike shall immediately after general election?

The prices of RON95 petrol, diesel and liquefied petroleum gas (LPG) has remain at the present rates for now. The RON95 is sold at RM1.90 per litre, diesel at RM1.80 while LPG is priced at RM1.90 per kilogramme since Dec 4 last year.

I’m sure this will NOT be long as subsidies borne by the Government will rise from RM8 billion to RM18 billion this year. In short, no matter what the Government do, it will have no choice but will eventually have to increase the RON95 petrol price.

Inflation is where your purchasing power become less due to price increase. A few year back, a visit to Tesco supermarket by spending RM300 can fill up the shopping trolley. But now, it hardly able to.

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Bank Negara Malaysia-Monetary Policy Statement

At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

The global economic recovery in the second quarter of the year was affected by supply disruptions arising from natural disasters and geopolitical developments, the impact of fiscal consolidation measures, the more uncertain conditions in the global financial markets and the higher commodity prices. Going forward, global growth will remain highly uneven across regions, with increased downside risks. For the region, growth is expected to be sustained by robust domestic demand, increased investment activity and intra-regional trade.

In the domestic economy, the latest indicators point to a moderation in growth in the second quarter, due primarily to slower external demand, greater than expected disruptions in the global manufacturing supply chain and lower than projected public sector investment. Private consumption and investment have, however, continued to be important drivers of growth. Going forward, growth is expected to improve, underpinned by continued strength in private consumption and private investment. This growth prospect however, could be affected by the heightened external risks.

Domestic headline inflation increased to 3.3% in May on account of higher food and fuel prices. Supply factors continue to be the key determinant affecting consumer prices with global commodity and energy prices projected to remain elevated. There are also some signs that domestic demand factors could exert upward pressure on prices in the second half of the year.

The MPC’s assessment is that the risks to inflation are on the upside. While the outlook for growth remains positive, there are heightened uncertainties arising from global developments that have created higher downside risks to growth. The MPC will assess carefully the evolving economic conditions and to the extent that the growth momentum is sustained, further normalisation of monetary conditions will be considered to safeguard price stability.

Bank Negara Malaysia
7 July 2011

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The consumers especially the fixed income earners, will be the hardest hit. One of the golden rule to protect wealth in an inflationary environment is the income must rise faster than the increase of the cost of living. Sad to say that all the money sitting idle at bank fixed deposit which earned 3% will hardly beat any inflation rate.

Some of you may resort to cut down expenses especially on grocery shopping and eating at home. Eating at home can translates to healthier and affordable meals plus a happier family as it can create strong bonding. You have the option of refinance your properties to free up some cash.

The newspaper even reported some folks are fishing at lake for the food! I thought fishing is merely for recreational activities.

Some will take up part time jobs like doing Direct Sales, selling Insurance, Unit Trust etc, to complement their existing income. All these activities required you to meet peoples, travel and have people skills.

What happen if you don’t have selling or people skills? A good option is learn how to make money online. It provide flexibility and low start up cost. Your can start a online business with PC and Internet connection.

Do check out my written book called “Make Money Online Without Selling Anything!” which was publisher by True Wealth. This book is specially written with you in mind.

Feel free to download the FREE book chapter at CPA Secret by leaving your name and e-mail address at www.CPASecret.com