Inflation expected to dampen spending in Malaysia ahead of Chinese New Year celebrations

Inflation expected to dampen spending in Malaysia ahead of Chinese New Year celebrations
Customers buy decorations for the upcoming Chinese New Year celebrations at a shop in Chinatown, Kuala Lumpur. (Photo: CNA/Fadza Ishak)

KUALA LUMPUR: With the Chinese New Year just a few days away, festive songs can be heard playing loudly in the vicinity of Chinatown in Kuala Lumpur.

In preparation for the year of the rabbit, customers at the iDecor Home shop in Petaling Street were picking out lanterns, plastic flowers, Chinese calligraphy stickers and rabbit-themed decorations among other things.

One of its staff members who declined to be named told CNA that the price of most decorations have increased by between 10 and 20 per cent in the past year.

“People will still buy the decorations but maybe not as much as before. Our customers understand why the prices are higher. It is not something that is only faced in Malaysia,” she said.

While sales are picking up ahead of the festive season, businesses are cognisant that inflation and higher costs will make consumers more careful about their spending this year.

“If they decorated their whole house including every room last time, now they would concentrate only on certain parts of the house such as the living room,” added the iDecor staff.

According to the Department of Statistics Malaysia (DOSM), the country’s consumer price index rose 4 per cent in November 2022 as compared to the same month of 2021.

Food inflation increased by 7.3 per cent and remained the main contributor to the rise in overall inflation for November, according to a DOSM report released on Dec 23 last year.

A stall selling cookies in Petaling Street, Kuala Lumpur before the 2023 Chinese New Year. (Photo: CNA/Fadza Ishak)


The Small and Medium Enterprise (SME) Association of Malaysia’s president Ding Hong Sing said the prices of goods are higher following the implementation of a new minimum wage of RM1500 (US$346) per month, coupled with the weak performance of the Ringgit.

He said that the new minimum wage order, which began to apply to companies from as early as May last year, translates into an additional RM1.85 billion in costs for the association’s members every month.

“People will still celebrate the new year, but they will probably spend less compared to before. When the economy was better, people just spent money. Nowadays, people tend to ask about the price of things first before purchasing them,” he said.

Kuala Lumpur Fruits Wholesalers’ Association president Chin Nyuk Moy echoed the same sentiments.

She said that most wholesalers have reduced their import of oranges from China this year as they did not want to run the risk of overstocking.

She said that the wholesale cost of a box of 24 class one mandarin oranges is RM28 this year. This is around 10 per cent more as compared to last year. Most of the oranges are exported from places such as Xiamen and Yong Chun in China.

“This is a perishable product and cannot be kept for a long time. If we are unable to sell all of them, we will have to get rid of them and lose money,” Ms Chin said, adding that people tended to only shop for oranges at the last minute.


At the same time, consumers will need to fork out more for the goodies this year.

Rachel Koh, the owner of Happy Meal pastry shop in Chinatown, Kuala Lumpur. (Photo: CNA/Fadza Ishak)

Ms Rachel Koh, who operates a family-run business selling cakes and pastries at the Happy Meal cafe in Chinatown, said they increased the price of cookies by about 10 per cent this year in order to cover the rising cost of ingredients such as butter, flour and fillings.

Among the cookies on sale include peanut cookies, walnut cookies, almond butter cookies and pineapple tarts, with prices starting from around RM20 per container.

“There must be a slight increase in price to cover inflation but not too much. This year, we brought in less stock because we are afraid we can’t sell all of it,” she said, adding that they gave discounts to their regular customers. The business has been operating for 18 years.

Lana Ng who heads the Chai Huat Hin eCommerce business development unit. The shop is located in Chinatown, Kuala Lumpur. (Photo: CNA/Fadza Ishak)

Ms Lana Ng who heads the Chai Huat Hin eCommerce business development unit said that a limited supply of items popular during the festival such as waxed sausages from Hong Kong, sea cucumbers, scallops and abalone has seen prices increase by up to 30 per cent.

She said the price increases are caused partly by logistical issues.

“The supply is less this year, and our currency has dropped in value against the US dollar. We had to order these things when the currency was much weaker than currently,” she told CNA at the retail shop in Chinatown which has been around since 1972.

Customers buying food supplies at the Chai Huat Hin shop in Chinatown, Kuala Lumpur. (Photo: CNA/Fadza Ishak)

For some businesses, they remain hopeful about this year’s sales.

Oloiya, which specialises in selling dried meat products, said it was still too early to predict sales for the upcoming Chinese New Year. It has 20 outlets in Malaysia, with 16 of them located in the Klang Valley.

Its executive director Raymond Khue noted that sales were very good last year because Malaysians could not travel out of the country. He explained that the company’s products are typically given as gifts during visits.

The company increased the price of its pork and chicken bak kwa (dried meat) from RM120 to RM122 per kg last year. It has yet to raise prices this year.

“We cannot say anything about the numbers yet. People will still buy the products, but it might be less compared to last year,” he said.


However, next weekend is still a time for celebration and some are saying that they won’t skimp on the occasion, especially since this is the first Chinese New Year without COVID-19 restrictions since 2020.

Ms Lai Mey Chin, 39, said that she will be shopping less for this Chinese New Year. But this is because she will be traveling from Kuala Lumpur to her mother’s hometown of Kampar in Perak.

This will be the first trip outside the Klang Valley for her elderly mother since the pandemic.

Since they won’t be home in Kuala Lumpur during the first week of the new year, things like cookies, snacks and drinks will be purchased in moderation, said Ms Lai.

But despite generally higher prices of things, Ms Lai said they will still use good and fresh ingredients for their steamboat reunion dinner.

“We will still spend for the reunion. It is only once a year. You cannot be too cheap. It’s the festive season and the mood must be there,” she said.

Source: CNA/rv(aw)