B40 more vulnerable to ringgit depreciation, says Finance Ministry

KUALA LUMPUR: The Finance Ministry acknowledged that households, particularly the B40 income groups are more vulnerable to the ringgit's depreciation.

This is due to the higher expenditure on food and beverages which accounts for 34.5 per cent of their monthly spending.

Following this, it added that various measures have been taken to address the rising cost of living issues faced by the people, including the implementation of the Rahmah initiative to assist vulnerable groups, it said in a parliamentary written reply on March 18.

"Additionally, the government also assists the people through price controls and subsidies on essential items such as food and fuel.

"Meanwhile, to further enhance household income sustainably, the government is committed to increasing opportunities for high-skilled employment and supporting worker wages through productivity enhancement."

The Finance Ministry said the impact of the depreciation of the ringgit on the Consumer Price Index (CPI) is still under control despite a decrease of five per cent in the exchange rate of the ringgit against the US dollar.

It said that based on Bank Negara Malaysia's (BNM) analysis, the decrease correlates with an average of 0.2 percentage point increase in CPI.

As a nation that focuses on exports, the ministry added that the ringgit depreciation boosts revenue for export-oriented manufacturing industries which results in short-term translation gains.

"The government, however, is aware that the ringgit's depreciation will elevate the cost of import transactions, reducing disposable income and household savings.

"We also acknowledge that the impact of the depreciation is highly affecting imported goods particularly vegetables and fruits, meat and dairy products as well as fish and seafood.

"Yet, moderate global commodity prices help alleviate the impact of the ringgit depreciation on inflation to some extent," it said.

It said this in response to Larry Sng Wei Shien (PBM-Julau) who asked the ministry to state the impact of the ringgit depreciation throughout the year on the country's economic performance, particularly on household income and the manufacturing sector.

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