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KUALA LUMPUR: Malaysia's household income growth highlights the nation's economic resilience and improving living standards, driven by sound fiscal policies and post-pandemic recovery efforts, economists said.
Despite inflation and lingering challenges, income growth and poverty reduction show that the government's fiscal and welfare policies are helping lower-income groups.
Economists, however, said higher income means little if household spending continues to exceed earnings.
Still, they said the economy is on the right track, even if real income gains are still modest.
According to the Department of Statistics Malaysia's Household Income and Expenditure Survey (HIES) 2024, Malaysia's average monthly household income rose 3.8 per cent to RM9,155 in 2024 from 2022.
The average monthly disposable household income increased 3.2 per cent to RM7,584, while the median disposable income rose 5.1 per cent to RM5,999, representing 82.8 per cent of total gross household income.
By income group, the B40 households (3.28 million) earned up to RM5,859; the M40 group earned between RM5,860 and RM12,679; and the T20 group (1.64 million households) earned RM12,680 and above.
Household spending also increased, with average monthly expenditure up 3.9 per cent annually to RM5,566 in 2024 compared with 2022.
Hardcore poverty has almost been eradicated, falling to 0.09 per cent, or fewer than 8,000 households earning below the Food Poverty Line Income.
INFLATION OUTPACES INCOME GAINS
Universiti Teknologi Mara's Business Management Faculty senior lecturer Dr Mohamad Idham Md Razak said while the household income improve, it may only modestly outpace inflation depending on specific cost-of-living pressures in urban and rural areas.
While headline inflation has remained manageable, essential expenses such as food, housing, and utilities continue to increase faster than overall inflation, particularly in major cities.
"Thus, while income growth offers some relief, many families may still feel financial strain, especially those in the middle- and lower-income brackets.
"Sustaining higher real wage growth and enhancing productivity will be key to ensuring that income gains translate into improved purchasing power," he added.
Idham, however, lauded the effectiveness of targeted government interventions aimed at uplifting low-income households which reduce the absolute poverty rate to 5.1 per cent.
He said initiatives such as cash assistance under the Sumbangan Tunai Rahmah, food aid, rural development programmes and income-generating opportunities under the Madani Economy framework have contributed significantly to this progress.
"Moreover, increased access to education, healthcare and digital infrastructure has helped empower vulnerable groups to improve their livelihoods.
"The steady reduction in poverty suggests that Malaysia's inclusive growth policies are gradually translating into tangible socioeconomic improvements at the grassroots level," he said.
Idham said the narrowing of the Gini coefficient reflects meaningful progress in reducing income inequality, driven by a combination of wage-support policies, social transfers and improved employment opportunities across sectors.
He said the government's focus on equitable development through initiatives such as the Progressive Wage Policy, targeted subsidies, as well as greater support for micro, small and medium enterprises has helped bridge income disparities between regions and social groups.
"Efforts to enhance rural connectivity, expand technical and vocational education and encourage high-value job creation have also played pivotal roles in promoting upward mobility and a fairer distribution of national wealth," he added.
Putra Business School economic analyst professor Dr Ahmed Razman Abdul Latiff said while rising incomes are generally viewed as a sign of economic recovery, the real impact depends on whether households have enough left after covering their expenses.
"Income growth should translate into better purchasing power but what needs to be done here is to match household income and household expenditures so that we can see if the household has enough disposable income for savings, investment and to improve their quality of life.
"There is no point having higher income when total monthly expenditure of the household far outweighs the income," he added.
The data comes amid rising concerns over the cost of living, as essential expenses such as housing, food, transportation and utilities continue to climb in many states.
While incomes have increased, the gap between earnings and living costs may still be widening, particularly in lower-income and rural households.
UniKL Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said the 3.8 per cent growth recorded over the two-year period is quite significant, considering the nation was still recovering from the post-pandemic period in 2022, when both salaries and business incomes suffered substantial losses.
"The year of 2022 also recorded significant rise in inflation rates due to spike in demand in recovery as well as triggered by geopolitic events, such as Russia-Ukraine war," he told Business Times.
The headline inflation rate in 2022 was 3.8 per cent, with remarkable increase of 5.8 per cent in food and beverage, transport (4.7 per cent) and restaurants and hotels (5.0 per cent)," he said.
Core inflation stood at 3.0 per cent, up 0.7 per cent from 2021.
"Hence at least for the two years, there is a good growth to catch up with the spike in inflation rates in the same period, albeit the income growth is still behind," he added.
INCOME AND INEQUALITY IMPROVE
Digging further into the HIES 2024 study, income inequality had also improved, with the Gini coefficient narrowing from 0.404 in 2022 to 0.390 in 2024. This indicates a fairer income distribution nationwide.
The three top-earning states were Kuala Lumpur (RM10,802), Putrajaya (RM10,769) and Selangor (RM10,726), all above the national level.
Aimi said Malaysia's narrowing income gap and lower absolute poverty levels demonstrate the effectiveness of government fiscal policies and social aid initiatives targeted at the lower-income segment.
"This indicates success of government fiscal policy to uplift the income level of the B40 in general, monetary assistance and other welfare programmes.
"The post-pandemic economic recovery has been further strengthened by the successful implementation of government programmes," he added.
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Keywords: EconomyHouseholdInflationDosmIncome GroupExpenditure Survey
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