INTERACTIVE: Pahang worst hit by inflation in restaurant, hotel sectors

PETALING JAYA: Rising prices affect many Malaysians, but those in Pahang are feeling the pinch more than others when it comes to eating out and staying in hotels.

According to Statistics Department inflation figures, the state saw the biggest rise in the annual inflation rate for restaurants and hotels in 2023 at 7.1%.

The hike was mainly caused by spending at restaurants and cafes, which went up by 7.7% last year, while accommodation services recorded a 3.2% hike.

Economists said prices went up the most in Pahang due to a surge in demand in the state, which is seeing a boom in domestic tourism after the easing of Covid-19 restrictions.

Pahang’s inflation rate for restaurants and hotels in 2023 was higher than Kuala Lumpur’s at 6.9% as well as Selangor’s and Putrajaya’s at 6.2%. each.

Based on Tourism Malaysia’s figures, Pahang was the most visited state in 2022, with 7.8 million domestic tourists.

In 2023, it was the second biggest domestic travel destination after Johor, attracting 8.5 million tourists.

Among the top attractions in Pahang were Genting Highlands, Cameron Highlands, Pantai Teluk Chempedak, Strawberry Farm in Brinchang, Tanah Rata, Kuantan City Mall and East Coast Mall.

“Pahang’s high inflation for restaurant and hotels is likely due to surges in demand as cost increases tend to be more uniform across states,” said Sunway University professor of economics Yeah Kim Leng.

Prof Yeah said if the inflation spikes are a one-off phenomenon, they are less concerning due to temporary or transitory factors unique to the state.

“However, if the high rates of increase continue, there could be structural or more permanent supply-side or demand-side forces at play that merit further investigation,” he said.

Restaurants and hotels had the highest inflation hike in the country last year among all categories of items, goods and services that the Statistics Department monitors.

Prof Yeah said that variation in state-level inflation for different consumer price index (CPI) categories are due to differences in supply and demand conditions, market structure, and pricing behaviour of firms and businesses.

“Temporary supply shortages or spikes in demand can cause prices to shoot up.

“Similarly, if there are many firms or businesses competing vigorously in the state, prices tend to be less subject to price hikes.

"Likewise, if inflation expectations are low, firms and business are less likely to raise prices for fear of losing customers,” he said.

HELP University economist Prof Dr Chung Tin Fah said not all restaurants and hotels in Pahang raised their prices by 7.1% in 2023.

He said those most affected are possibly those in tourist areas such as Genting or Cherating.

“The year 2023 was a special year as it was the end of the movement control order.

“All establishments took the opportunity to raise prices, especially ones most frequented by tourists or with high demand,” he said.

For the category of food and beverages, Putrajaya, Selangor and Sarawak recorded the highest inflation rate of 6.1% each for 2023.

Putrajaya and Selangor also recorded the biggest growth in inflation last year for transportation at 1.9% each.