Last month, the statistics department (DOSM) released its first-ever Cost of Living Indicators for 2023, a publication that compiles a living index growth rate for each state in Malaysia and even districts.

Using the data, here are six states with the highest cost-of-living increase last year, which hopefully will help you understand where challenges lie and help you budget more effectively for the future.

The index covers a range of items Malaysians spend on, including food and beverages; restaurants and hotel services; alcoholic drinks and tobacco; clothing and footwear; housing, water, electricity, gas and other fuels; health; transport; information and communication; recreation, sports and culture; and education services.

The following info will be supplemented by inflation data – also released by DOSM – to provide more context as to which areas of spending are increasing the most, as well as household income and expenditure data to detail the differences across the states.

1. Putrajaya

The federal territory of Putrajaya had the greatest increase in living costs last year at 4.6%.

Putrajaya is, after all, the centre of government. Its population grew by 1.5% to 118,800 last year, which is not surprising given that the city is 20-30 minutes away from Kuala Lumpur by the MEX highway, and now has Mass Rapid Transit 2 stations as well.

In addition, it is convenient for those who work in neighbouring Cyberjaya, the base for many local and international technology companies.

The average household income in Putrajaya is the highest in Malaysia at RM13,473 per month. But as more and more people move there and start spending, things naturally get expensive.

Food and restaurant/hotel prices rose by a whopping 5.9% and 5.5%, respectively, last year, while housing and utility prices also shot up by 4.9%.

2. Perlis

This small gem of a state had one of the highest increases in cost of living last year, at 3.9%. And it isn’t hard to understand why.

Perlis lies on the border with Thailand, which has allowed the state to benefit from tourists following the reopening of international borders and travel after the pandemic.

Restaurant and hotel prices rose the most by 8.2% in 2023, while recreational services and culture also went up by 4.5%.

With this sharp increase, those in Perlis might find things a bit challenging as the average household income here is one of the lowest at RM5,664 per month, which demonstrates just how much of a double-edged sword tourism can be.

3. Johor

Johor comes in third on this list, with a cost-of-living rise of 3.5%.

This southern state has a similar problem as Perlis as they both have international borders; Johor receives many tourists from Singapore, whose spending power inflates prices for local residents.

What’s interesting is that the component that increased the most was education prices, at 7.1%. Indeed, there is a growing trend among Malaysians, and even Singaporeans, to send their children to schools in Johor, considering it is cheaper because of the strong SGD and relatively easy travelling arrangements.

This has had a ripple effect on Johoreans: food and restaurant/hotel prices rose sharply by 4.3% and 5.8%, respectively, last year.

It is no surprise, then, that the nearest districts to Singapore such as Johor Bahru (+3.2%), Kota Tinggi (+2.9%), Kulai (+2.9%) and Pontian (+2.6%) are among those with the highest increases in living costs.

4 & 5. Melaka & Kuala Lumpur

Beautiful and historical Melaka is joint No. 4 with KL, with a cost-of-living increase of 3.3%. Food and restaurants/hotels lead this growth, with prices rising by 4.6% and 3.5%, respectively, in 2023.

By district, Jasin (+3.5%) was the main contributor: a plate of white rice, chicken and vegetables cost RM9 here, comparable to prices in major cities such as KL (RM8.50), Seremban (RM8.75), and Klang (RM8.75).

Meanwhile, the bustling federal territory of Kuala Lumpur similarly saw a living increase of 3.3%. Again, restaurant/hotel and food prices rose the most, by 6.9% and 4.1%, respectively, last year.

KL, of course, is the centre of employment for Malaysians from all over. Households here are among the biggest income earners at RM13,325 per month (second only to Putrajaya) – but they are also among the highest spenders at RM7,823 per month.

Furthermore, KL has the highest average house price of RM778,485 as of last year. Good luck to hopeful future homeowners.

6. Selangor

Finally, Selangor ranks sixth on this list with an increase of 3.2%.

The state has the same concerns as KL with food and restaurant/hotel prices driving most of the increase, at 6.1% and 6.2%, respectively, in 2023. The average household income is third-highest at RM12,233 per month, while spending is also high at RM6,770 per month.

And of course, house prices in Selangor are expensive at around RM535,131. Clearly, life in the Klang Valley can both be rewarding and challenging.

This article was written by Su-Wei Ho for MyPF. To simplify and grow your personal finances, follow MyPF on Facebook and Instagram.

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