GEORGE TOWN, Aug 12 ― Malaysians must brace themselves for a jump in inflation by the end of the year following the continuous slide in the ringgit value, Penang Chief Minister Lim Guan Eng said today.

The DAP leader noted that the ringgit weakened beyond 4 to the US dollar today, its lowest since the Asian Financial Crisis over 17 years ago, making it the worst performing currency in Asia.

“The Malaysian currency is performing even worse than Thailand and Indonesia. This means every Malaysian's wealth has been reduced by 20 per cent,” the Penang lawmaker said.

According to the Statistics Department last month, Malaysia’s Consumer Price Index (CPI) in June rose 2.5 per cent from last year on higher food prices, following a gradual acceleration from April after the government-imposed 6 per cent Goods and Services Tax (GST).

Lim, who is also DAP secretary-general, said today that the continuing decline in ringgit value would also mean that all financial reports previously produced by Bank Negara and the Malaysia Productivity Corporation are now irrelevant.

He pointed out that these reports, which include the 11th Malaysia Plan (11MP), are no longer reliable due to the difference in the currency rates used for projections.

“These reports are no longer accurate and the 11MP may not be relevant anymore as the figures used are all based on the old exchange rate,” he said.

The ringgit value per US dollar closed at RM3.97 yesterday and dropped further today to surpass the RM4 mark.

Economists from Penang Institute noted that the ringgit value is now at its lowest since 1998 and predict that it will remain weak next month.

The researchers, led by Penang Institute's head of economics Dr Lim Kim-Hwa, also predicted that the US interest rate will rise in September, putting further pressure on the ringgit value.

They also warned in a report that Malaysian households will suffer a loss of purchasing power and that healthcare will likely become more expensive since medical products are mostly imported.

Lim yesterday claimed that Penang's hope of achieving high income status was dashed due to the drop in the ringgit value.

He said Penang may have to wait another five years to achieve high-income status and another 10 years to achieve the Vision 2020 target of US$15,000 GDP per capita.

Lim blamed Putrajaya's alleged failure in its economic policies and the 1Malaysia Development Berhad controversy as some of the root causes of the ringgit slide.