CPI rises 2.6% in March

KUALA LUMPUR: Malaysia’s consumer price index (CPI), a broad measure of inflation, rose at a slower pace of 2.6% from a year ago, lower than consensus estimates of 3.4%

The Statistics Department said the March CPI increased by 2.6% to 113.8 compared with 110.9 in the same month last year due to increases in 10 major groups.

Among the major groups which recorded increases were the index for alcoholic beverages and tobacco by 22.7%; miscellaneous goods and services (5.1% ); food & non-alcoholic beverages (5%); furnishing, household equipment and routine household maintenance (4.7%); restaurants and hotels (4.5%); and health (4.2% ).

The department said the overall index was also influenced by the decrease in transport group by 8.2%.

JF Apex Securities said the latest CPI reading was below its expectation of 3.7% and market consensus of 3.4%.

“We foresee CPI will continue to grow moderately by 2.7% year-on-year (y-o-y) in April 2016 underpinned by continuous growth in its main products including food, alcoholic and tobacco and housing, water, electricity, gas and other fuels.

“In addition, we reckon the transport index will slightly recover by next month amid the upward adjustment of domestic fuel costs in April 2016 after the prices of both RON95 and RON97 petrol were increased by 10 sen to RM1.70 and RM2.05 respectively and diesel at RM1.55 (up 20 sen) based on the managed float mechanism,” JF Apex said.

The research house maintained its view that Bank Negara would keep the overnight policy rate (OPR) at 3.25% in 2016 as the overall domestic financial conditions had remained relatively stable.

“We believe at the current level of the OPR, the stance of monetary policy remains accommodative and supportive of economic activity,” it said.

On a monthly basis, CPI for March 2016 decreased 0.6% to 113.8 from 114.5. CPI for the January to March period registered an increase of 3.4% compared with the same period last year.

The increase of 3.4% in the CPI for January to March 2016 period was led by increases in the main groups with high expenditure percentages: food and non-alcoholic beverages (4.6%) and housing, water, electricity, gas and other fuels (3%). Other increases were alcoholic beverages and tobacco (22.6%); miscellaneous goods and services (5.3%); health (4.5%); restaurants and hotels (4.5% ) and furnishing, household equipment and routine household maintenance (4.5%).

The Statistics Department said core inflation, which excluded most volatile items of fresh food as well as administered prices of goods and services rose 3.6% in March 2016 compared with the same period of the previous year.