October 9, 2025
PETALING JAYA – While Malaysia’s latest household income report paints a positive picture of rising earnings and narrowing inequality, economists and consumer advocates caution that the reality for many Malaysians is more complex.
According to the Statistics Department (DOSM), the average monthly disposable household income increased by 3.2% to RM7,584 in 2024, while the median rose by 5.1% to RM5,999, representing 82.8% of total gross household income.
Although the data suggests households are now better able to meet essential spending needs, experts note that rising living costs continue to blunt real gains.
Economist Lee Heng Guie, executive director of the Socio-Economic Research Centre, warned that the headline figures must be viewed in context.
“We must also recognise that the cost of living continues to rise,” he said.
“When we adjust for inflation, the real spending power of households may not have increased as much as the numbers suggest.”
Lee noted that while the figures reflect Malaysia’s stronger economic performance in 2024, many households continue to face challenges on the ground.
“The DOSM survey is comprehensive and credible, but it captures average conditions. In reality, many people still feel their wallets are tighter, especially in urban areas where living costs are higher,” he said.
He added that wage improvements have helped to some extent, but remain uneven across sectors.
“The key is to ensure income growth comes organically, through better-paying jobs and higher productivity, not just through government aid,” he said.
On fuel expenditure, one of the main components of household spending, Lee said the Budi95 targeted subsidy programme offers temporary relief, but its long-term impact remains uncertain.
“At least for now, the 300-litre fuel cap at RM1.99 per litre helps cushion expenses. But we do not know how long this level of subsidy will hold as global oil prices fluctuate,” he said.
“Budi95 gives temporary breathing room, but sustainable relief must come from stable income growth.”
Lee also commented on the new B40 median income of around RM5,858, saying that while the numbers are statistically sound, they do not always reflect real-life experiences.
“Someone classified as M40 may actually live like a B40 due to lifestyle costs and aspirational spending,” he said. “It’s about what you can actually afford, not just what your income category says.”
He pointed out that Malaysia’s wage share of national income – currently around 33% – remains below the target of 40–45%, indicating there is still room to meaningfully raise household earnings.
“The report is a positive sign that income levels are rising and inequality is narrowing, but we cannot ignore that the cost of living is increasing faster than wages for many Malaysians,” Lee said.
Bank Muamalat Malaysia Bhd chief economist, Dr Mohd Afzanizam Abdul Rashid, agreed that rising incomes have helped support purchasing power, especially amid relatively stable inflation.
“In addition, cash transfer programmes such as Sumbangan Tunai Rahmah and SARA have also complemented household income. At the same time, fuel subsidy rationalisation has been implemented in a gradual fashion,” he said.
However, he conceded that raising household income remains a work in progress, adding that certain education and industrial policies should be introduced to help Malaysians elevate their income.
Mohd Afzanizam said stronger enforcement is also important to prevent malpractices that could drive up the prices of essential items, which in turn could erode purchasing power.
“Prices too need to be looked at by enforcing rules and regulations to avoid malpractices such as hoarding, price manipulation and cartels,” he added.
Federation of Malaysian Consumers Associations (Fomca) chief executive officer, Dr Saravanan Thambirajah, was more sceptical that the figures reflect everyday realities.
“For many in the M40 and B40 groups, the reported figure feels unrealistic, as essentials like food, transport, housing and utilities continue to consume a significant share of their income,” he said.
He noted that averages can be skewed by higher earners in the T20 group, and that income disparities between states, as well as between urban and rural areas, remain stark.
“The median figure gives a better reflection but still doesn’t capture regional disparities,” he said.
“While the data provides a statistical benchmark, it doesn’t mean most households actually feel they have that level of disposable income in hand.”
Saravanan said that while the data shows household disposable income has risen, for many families – especially in urban areas – the reality feels very different.
“Within each category, there are wide differences in actual disposable income and living costs. For instance, an M40 family in Klang Valley may feel more financial strain compared to an M40 household in a smaller town due to higher housing, food and education costs,” he said.
“Thus, while the classification provides a framework for policy, it oversimplifies the complexities faced by households.
“The averages do not reflect everyday struggles with high food, housing and transport costs,” he said.
He said fuel remains one of the largest expenditure items, adding that Budi95 could help cushion the impact for lower- and middle-income groups.
“For many families, especially in the lower- and middle-income groups, transport costs take up a large share of monthly budgets.
“The Budi95 subsidy will help cushion the impact, particularly for lower-income groups who rely heavily on private vehicles,” he said.
“In the long term, transport policy reforms, better public transportation accessibility, and reducing dependence on private cars will be critical to easing household financial pressures.”
He also called for a review of income classification categories, noting that they often fail to capture life experiences.