IMPACT OF RISING FOOD PRICE TO

CONSUMER

INTRODUCTION

• What is CPI?– A consumer price index (CPI) measures changes in

the price level of a market basket of consumer goods and services purchased by households.

• How to measure?– Calculate the average price of goods and services

in certain period.

Sub-group Wt.

Index % Change

May 2012

Apr 2013

May 2013

Jan - May 2012

Jan - May 2013

May 2013/ Apr 2013

May 2013/ May 2012

Jan - May 2013/2012

Food & Non-Alcoholic Beverages

30.3 107.1 110.4 110.8 106.9 110.3 0.4 3.5 3.2

Food 28.9 107.2 110.6 111.0 107.0 110.5 0.4 3.5 3.3

Food At Home 18.9 106.6 110.3 110.8 106.6 110.4 0.5 3.9 3.6

Rice, Bread & Other Cereals

4.4 102.5 104.3 104.4 102.4 104.2 0.1 1.9 1.8

Meat 2.9 105.3 113.3 110.5 104.4 110.2 -2.5 4.9 5.6

Fish & Seafood 4.5 112.3 115.7 117.2 111.8 116.4 1.3 4.4 4.1

Milk & Eggs 1.8 108.5 111.6 111.9 108.8 111.7 0.3 3.1 2.7

Oils and Fats 0.6 101.4 101.1 101.0 101.3 101.2 -0.1 -0.4 -0.1

Fruits 1.2 107.7 112.0 111.6 107.8 111.5 -0.4 3.6 3.4

Vegetables 2.1 101.4 105.1 110.1 103.4 108.8 4.8 8.6 5.2

Sugar, Jam, Honey, Choc. & Confectionery

0.6 113.6 119.2 119.4 113.5 119.2 0.2 5.1 5.0

Food Products n.e.c. 0.8 110.0 110.8 110.9 110.1 110.6 0.1 0.8 0.5

Food Away From Home 10.0 108.2 111.0 111.3 107.8 110.7 0.3 2.9 2.7

Coffee, Tea, Cocoa & Non-Alcoholic Beverages

1.4 105.1 106.5 106.6 104.7 106.4 0.1 1.4 1.6

IMPACT OF RISING FOOD PRICE TO CONSUMER

IMPACT ON HEALTHY EATINGMore than half of consumers surveyed think that high food prices make it difficult to eat healthy

FAIRNESS AND TRUSTMany people feel that they are treated unfairly when it comes to food prices

LESS LOYALTYPeople are changing where they shop for food

SAVVY SHOPPINGWhen they are shopping, people are comparing prices and look for value more

Cont.. Cost of living increase.– Expensive food has a direct cost to lower income

earners many of whom are unable to increase their wages to offset the rising cost of living.

Food importers and food processors will see a rise in their variable costs

Poor people, especially in urban areas, suffer due to rising food prices

Higher food prices do not necessarily lead to stronger revenues and profits for the world’s poorest farmers.

THE CAUSES OF HIGH PRICE World cereal production fell by 3.6 percent in 2005 and

6.9 percent in 2006 due to bad weather in major producing countries.

Stock levels are very low, which magnified the impact of production shortfalls.

Petroleum prices and food prices are highly correlated. Increased demand from the biofuels sector also tended

to push prices upwards.

GOVERNMENT POLICY RESPONSE

The ceiling retail priceGovernment announced that the ceiling retail price of standard grade food (rice) will remain at current levels in order to ease the burden on lower income Malaysians.

Rise of production and increase subsidies on locally produced basic foodstuffs.

Supply and Demand Curve

Price

Quantity

supply

Demand

Price Maximum

Pe

P1

e

Qe

CONCLUSION

Due to increase in food price in our country, everyone must play their responsibility and think

more about the society compared to gain the high profit. So, it can reduce the gap between the high

income and low income.

THANK YOU…