Economists know that the national inflation rate is an average inflation rate based on the average spending pattern of an average citizen, who is actually just a statistical entity.
To come up with a more realistic and transparent CPI index, I propose that the government adopt the following measures:
1. An urban inflation rate be measured and disclosed versus a rural/small town inflation rate. We all know that a bowl of noodle costs much less in a small town like Sibu than in PJ/KL.
2. That the government updates the consumer survey on which the CPI is based and which may no longer be relevant because the last survey was done years ago.
3. That the government reveals how much of the average cost of food for the consumer is imported so that we know whether a stronger Ringgit will help to keep a cap on imported inflation.
4. That the government and Bank Negara educate the public about the linkage between cost-push inflation and demand-push inflation. BN always say the two types of inflation are different but the truth is that cost-push can lead to demand-pull when expectations are anchored that food and oil prices will continue to rise. The worst type of inflation is galloping inflation caused by the people's diminishing faith in the Ringgit.
5. That the real reason for rising inflation (not the national average CPI) is partly because there is excess money in the system created by a managed currency policy. 101 Economics tells you that too much money chasing after too few goods leads to higher prices. Hence, letting the Ringgit appreciate will curb money creation and dampen inflation.