Examining the Effects of Domestic versus Global Prices Uncertainty on Sectoral Price Inflation in Malaysia

Abstract

Price stability is one of the main policy objectives that is targeted by policymakers in many countries. Price uncertainty occurs due to the changes in market structure and consumer preference and expectation, which may affect price stability. In this study, the researchers aimed to examine the effects of price uncertainty of consumer price disaggregation in Malaysian sectors. To be specific, the researchers were seeking to discover on how domestic and global commodity prices can affect sectoral Consumer Price Index (CPI) on price inflation in Malaysia and most importantly, whether the effect is different for economic sectors in Malaysia. In addition, the effects of other factors (i.e., internal and external factors) on Malaysian sectoral CPI inflation were also studied. The threshold generalized autoregressive conditional heteroscedasticity (TGARCH) model was used to generate the price uncertainties. For the purpose of analysis, the threshold regression approach was applied based on time series of each single sector, followed by a combination of panel data of all sectors. The results differed across sectors, revealing that the impact of price uncertainties was determined by the sensitivity of each sector towards the price uncertainties. The effect of price increase is larger than the effect of price decrease. Price fluctuations were obvious in sectors that were dependent on consumer price or commodity price. Exchange rate and oil price inflation had also greatly influenced the CPI inflation.

The Impact of the Inflation Crisis in Medication Pricing in Asean Countries: A Review

“…In economic literature, pharmaceutical products are acknowledged as an important item; consequently, inflation in their pricing increases the household budget (1). Numerous academics have shown that the inflation dynamics of industrialized nations have undergone significant modifications (2). Pharmaceutical businesses are experiencing increased pricing pressure which can be alluded to by the rise of the high inflation rate (3).…”