Dear friends,
As we enter the final quarter of the year, we are pleased to share insights on the average Consumer Price Index (CPI) across a 3-year period, from 2022 to 2024. This information can serve as a benchmark for companies considering salary adjustments and increments for the upcoming year.
Here is the average Consumer Price Index (CPI) from 2022 to 2024, based on the base year 2010 = 100, for different regions in Malaysia:
Year | Malaysia (Overall)
| Peninsular Malaysia | Sabah & WP Labuan | Sarawak |
2022 | 127.2 | 128.5 | 118 | 120.8 |
2023 | 130.4
| 131.7 | 120.8 | 124.5 |
2024 | 133.2
| 134.5 | 122.5 | 128.1 |
*Source: Department of Statistics, Malaysia, overall average for 2024 is based on January - August 2024
Recommendations:
It is common for employers to factor in average inflation year on year in determining salary adjustments or increment by basing on two thirds of the difference.
Annual increment
If you are working on annual increments, it is possible to use the CPI difference as a baseline - This baseline figure can be calculated as follows:
133.2 - 130.4
---------------- x 100 = 2.1%
130.4
Two-thirds of that would be 1.4% (Malaysia)
Upon determining the baseline to cater for inflation, it is advisable to include other factors and considerations such as company performance, individual performance, market competition, etc.
Salary adjustment for collective agreements
The same formula can be adopted in determining salary adjustment for collective agreements, but it shall be taken over a 3-year period (being the typical term of a collective agreement)
133.2 - 127.2
---------------- x 100 = 4.7%
127.2
Two-thirds of that would be 3.1%
Please note that performance, market competition or any other factors shall not be considered for collective agreements.
We wish to also bring to your attention that while the figure suggests a 3.1% adjustment, recent collective agreements indicate that employers have shook hands at a higher rate. The current average based on recent collective agreements is between 7% - 9%.
Conclusion:
While we understand that the data above shall not be treated as conclusive, we hope that it has given you an indication on how inflation could influence and shape a part of your increment consideration.
We urge you to utilise further benchmarking, salary surveys, and any form of data analysis that you may have in your possession.
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