Based on the subject given, we are ordered to analyze the Malaysias rising prices rate over the past 10 old ages by cognizing the factors that contribute the rising prices and the steps taken by the Malaysia ‘s authorities to get the better of or battle the rising prices. In general, rising prices is a rise in the general degree of monetary values of goods and services in an economic system over a period of clip. When the monetary value degree additions, each unit of currency bargains fewer goods and services. Meanwhile, rising prices rate is the yearly addition of per centum in the monetary value of goods and services. When the monetary value degree rises quickly, the rising prices rate is high, and when the monetary value degree Rhode Island

Examine Malaysia ‘s rising prices rate over the past 10 old ages and discourse its tendencies.

Inflation can be defined as one of the phenomena of general monetary value degree rises steadily in the long tally and no restrictions. For the past 10 old ages of Malaysia ‘s rising prices, we decided to analyse from the twelvemonth 2003 until twelvemonth 2012.

The graph shows the rising prices rate in Malaya from the twelvemonth 2003 to 2012. It can clearly be seen that there has been a highest rate in twelvemonth 2008 by 5.4 per centum while the lowest rate by 0.6 per centum in twelvemonth 2009 so Malaysia ‘s rising prices rate became normalized to the 3.2 per centum in twelvemonth 2011.

Harmonizing to The Department of Statistic Malaysia, which is one of the section that responsible to analyse the rising prices rate in Malaysia was recorded the mean 1.70 per centum in October 2012. While, in twelvemonth 2003 indicates the rising prices rate was 1.1 per centum. After that, the slow growing shows the difference between twelvemonth 2003 and 2004 was 0.3 per centum. It is average that in twelvemonth 2004, the rate of rising prices addition to 1.4 per centum. Then, it rises well over twelvemonth 2005 by 3.0 per centum. It is shows that get downing in twelvemonth 2005, the rising prices rate increased quickly from twelvemonth 2004 which is the difference was about 1.6 per centum. Continually in twelvemonth 2006, it has been a steady increased, with around 3.6 per centum rate of rising prices.

Suddenly, the rate falls by 2.0 per centum in twelvemonth 2007 because of the certain factors that can impact the rate of rising prices. Next, the rate rose dramatically by 5.4 per centum in 2008 due of the increasing in fuel monetary values on that clip. The rate does non longer because in 2009 it decreased by 0.6 per centum. Malaysia ‘s rising prices rate starts continuously somewhat increased to 1.7 per centum in twelvemonth 2010. The rate slowly goes up in 2011 by 3.2 per centum. However, the rising prices rate in Malaysia was recorded at 1.30 per centum in September of 2012.

To sum up, the overall old ages from 2003 to 2012, it shows that the tendency for rising prices rate over the past 10 old ages is fluctuated tendency. From get downing twelvemonth at twelvemonth 2003 to 2006, the graph shows easy increased and achieved the highest rate between these four old ages in twelvemonth 2006. After that, the graph beads in twelvemonth 2007 and lift mostly in twelvemonth 2008. In twelvemonth 2009, the rate of rising prices falls dramatically and starts increased back in 2010 and 2011. But the rate still decreased in September 2012. As a decision, the lowest rate was 0.6 per centum in twelvemonth 2009 while the highest rate was showed as much 5.4 per centum in 2008. In whatever manner, the authorities has decided to diminish the rising prices rate and became normalized in 2011.

What may be some of the factors that contribute to the rising prices rate tendency?

In Malaysia, rising prices rate shows the fluctuated of the rising prices rate tendency. It was indicated that the highest rising prices rate between old ages 2003 to 2012 was 5.4 per centum in 2008. By the manner, during twelvemonth 2009, the rate was dramatically goes to 0.6 per centum and the tendency was normalised back to the 3.2 per centum in twelvemonth 2011.

By mentioning the Keynesian theory, the three type of rising prices which is demand-pull rising prices, cost-pull rising prices, and constitutional rising prices. Based on the rising prices rate tendency between 2003 to 2012 in Malaysia, there are may be some of the factors that contribute to this rising prices tendency, such as the factor that can impact the aggregative demand and aggregative supply that about can impact the rising prices in many ways. For illustration, measure of money that authorities print, the involvement rate, the authorities outgo, the revenue enhancement cut, the increasing of Purchase Power Parity and an addition in money monetary values of natural stuff and pay rate.

In this state, the rising prices rate measures a board rise or autumn in monetary values that consumers pay for a standard basket of goods. The highest rising prices rate was at 5.4 per centum in 2008 because of the increasing in natural stuff such as fuel monetary values. When the fuel monetary values increased, so the houses will diminish their supply of goods and services. This will take to the addition in monetary value of other goods and services that will lend to the rising prices in the state. This state of affairs proved when the universe monetary value of fuel was addition, the monetary value of goods such as family goods will besides increase. In add-on, the fuel monetary value is decided by the authorities, nevertheless, authorities must take it earnestly when decide to increase the fuel monetary value. This may do two negative effects towards the consumers. First, for case, as a large population of Malayan society owns a auto, the addition in a fuel monetary value, will increase the cost of the auto users. Second, the overall operating cost of making concern in Malaysia will besides increase due to the higher cost of fuel.

The measure of money that the authorities print will increase the money supply which one of the major factors that contribute to the rising prices. This is because the higher the money supplied, the higher the rising prices rate. For illustration, if the authorities cuts the involvement rate, this will do the measure of money addition. Since a batch of money in the market, the production of goods will diminish because the demand of the merchandises is higher. Most of authorities today command their money supply. As more money offered in the market, the highest the rising prices particularly through publishing more measures. The printing of new money allows goods to be purchased without the existent exchange.

On the other manus, when the money supplied is higher in the economic system, this make the ingestion and investing besides addition and there are more occupation chances and this will promote the growing of economic system in the state. An increasing in money pay rate besides contributed to the rising prices. As many of labour work in the state, so the higher the pay for one unit of force. Therefore, to increase the end product of the state, the more of labor will be used and the higher the fringy cost of labor, the monetary value had to be raised. As the rewards are high, aggregative supply in the economic system will diminish and this will contributed to the rising prices occurs.

In add-on, the increasing of purchase power para ( PPP ) is besides one of the factors that contribute to the rising prices rate tendency. Purchase power para means the equal value of money. When there were increasing in purchase power para, consumer ‘s demand of the goods and services is besides addition. However, the goods and services offers in the market become less.

Furthermore, the other factors are the increasing in the authorities outgo and the revenue enhancement cut from the authorities. First, an increasing in authorities outgo. Government outgo can be divided into two, which are runing outgo and development outgo. An increasing in the authorities outgo can promote the increasing in the aggregative demand and at this clip, the monetary value degree will continually increase. Second, the revenue enhancement cut. If the authorities cut the revenue enhancement, so demand will increase due to the cut in monetary value of goods and services, the uninterrupted addition in aggregative demand in the economic system and have reached full employment will impact, the monetary value degree will increase.

Hence, any factor that increases aggregative demand can do rising prices. However, in the long tally, the authorities can get the better of this job by increasing the measure of money in circulation faster than existent growing rate of the economic system.

All of all, it can be said that, all the factors stated above can lend to the rising prices occurs. Based on the rising prices tendency between the last 10 old ages, the tendency shows fluctuated tendency over the 10 old ages. By and large, during the past 10 old ages, the rising prices is already become lower and moderate rising prices after our state faced the high rate of rising prices, called hyperinflation during the economic crisis. Hyperinflation is caused by an inordinate growing of the money supply and refers to the growing of higher monetary value degree and the growing is continuously increased.

The rate of rising prices in Malaysia may at low or moderate rising prices that contribute the fluctuation tendency during the last 10 old ages. This tendency occur when the money supply turning faster than the rate of economic growing.

Measures undertaken

There are some steps are undertaken by our authorities in order to battle rising prices in Malaysia. One of the actions taken by our authorities is back uping little and average endeavors ( SMEs ) in the market. Small and medium endeavors are of import for every state because they can assist to hike up a state ‘s economic growing. As we know one of the factors that cause rising prices is demand-pull rising prices which means a demand of a good or service additions in the market, but the supply of the peculiar good and service remain the same due to the figure of provider is limited in bring forthing the merchandise and service. Therefore the monetary value of the merchandise or service will lift as the demand is higher than supply and this will do the consumers need to pay more in order to fulfill their demands. Hence rising prices occurred.

In order to work out this job, our Malaysia authorities is implementing Particular Government Fundss for little and average endeavors ( SMEs ) . The chief intent of these financess which provided by our authorities is to develop and fostering more little and average endeavors in our state in order to increase the productiveness of merchandises and services in Malaysia. In twelvemonth 2007, Malaysia has provided 105 Particular Government Fundss for little and average endeavors with a entire sum of RM31.8 billion.

For illustration, our cardinal bank, Bank Negara Malaysia has allocated a sum of RM 6.75 billion is little and average industries 2, RM 2.85 billion in new enterprisers and besides RM 1.30 billion in nutrient industries. Besides that, Micro Enterprise Fund ( MEF ) has launched by our cardinal bank in twelvemonth 2008 and this is to assist those endeavors which started up with a little capital and less employers able to run their concern in the concern market. Bank Negara Malaysia has approved to utilize RM4.2 million to assist mirco endeavors and there are 241 micro endeavors get benefits from Micro Enterprise Fund ( MEF ) in twelvemonth 2008.

Through these fund provided by our authorities, there are more mirco, little and average endeavors bring forthing merchandises and services in the market. Therefore, productiveness of Malaysia will increase and it solved the jobs of demand-pull rising prices.

Furthermore, our cardinal bank, Bank Negara Malaysia applied pecuniary policy to battle rising prices. Lodge involvement rate is besides one of the ways to battle the rising prices in our state, Bank Negara Malaysia is responsible to put a most suited involvement rate on a specific clip for money rescuer. For illustration, when there is high rising prices rate in our state, Bank Negara Malaysia will necessitate to set the sedimentation involvement rate to higher rate in order to promote people to salvage more their money in the bank and indirectly to cut down the measure sum of money in the market which can forestall the value of our money to go less value. Besides that, since the involvement rate has increased, this will deter investors and houses to borrow money from the Bankss. Therefore, it will cut down the investing and ingestion in the market and accordingly the rising prices rate will diminish.

Year

2004

2005

2006

2007

2008

2009

2010

2011

Average involvement rate

2.69

2.84

3.51

3.50

3.51

2.11

2.56

2.88

Based on the graph and table above, we can see that as our state ‘s rising prices rate additions, the involvement rate offered by the bank increases every bit good in order to promote people to salvage money in the bank to cut down the measure of money in the market in order cut down the rising prices rate. Due to the economic Stimulus Package, the involvement rate is still high even though the rising prices rate in twelvemonth 2007 has decrease from twelvemonth 2006.

Decision