KUALA LUMPUR (Aug 30): These days, a packet of nasi lemak costs RM3.72 on average. A year ago, it was RM3.44. If we are talking about a cup of teh tarik, it has increased about 12% on average over the period of one year. It now costs an average of RM2.24 per cup. 

If these prices seem unreal, that is because they are based on national averages, taken from the Department of Statistics Malaysia’s consumer price index (CPI) reports. But many would have felt the pinch of higher prices. 

Indeed, many Malaysians lament that breakfast costs at least RM5 these days. Unfortunately, the higher cost of living is an issue consumers around the world are grappling with. 

While a higher cost of living impacts both the poor and rich, the group that feels the effect most is the middle-income group, often called the sandwich group. This is because they are “too rich” for government cash handouts but “too poor” to tackle higher costs without certain trade-offs regarding their lifestyle. 

By definition, the cost of living refers to the amount of money required to sustain a particular lifestyle, explains UOB senior economist Julia Goh, and this can vary significantly depending on individual choices and preferences. 

Meanwhile, inflation, as measured by the CPI, tracks the general price trends of a standard basket of goods and services over time. This is the main reason why the muted inflation rate currently — which is below the long-term average — does not resonate with consumers who feel their budgets being stretched even more in this environment.

While the CPI had cumulatively increased by 9.8% from the first quarter of 2020 (1Q2020) to 1Q2025, nominal private-sector wages per worker increased only 7.9% over the same period. Based on these data points, it is not difficult to see why consumers today are feeling the pinch.

In this week’s cover story, we explore the middle-income pains associated with higher cost of living and the dilemma of being called the “aspirational class” yet struggling to enjoy small luxuries as they stretch their monthly pay.   

The story also looks at how Gen-Z — the newest entrants to the workforce — are coping with the higher cost of living. This cohort is often labelled as financially irresponsible, prone to extravagance or “doom spending”, which can be summed up as mindless spending as a coping mechanism. But, are they really?

Read about it in this week’s issue of The Edge Malaysia.

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