“The average price of one litre of RON95 petrol was RM2.29 in March 2017 compared with RM1.60 in March 2016. As for RON97, the average price increased to RM2.59 in March 2017 compared with RM1.95 in March 2016,” said the Department of Statistics in a statement yesterday. Fuels and lubricants for personal transport equipment account for 7.8% of the CPI weights, it said.
PETALING JAYA: Higher fuel prices sent the rate of inflation for March soaring to its highest level in nearly nine years, with the consumer price index (CPI) rising 5.1%.
With the headline inflation rate the highest since November 2008 but lower than expectations, it was the transport sub-sector, which tracks the price of petrol at the pump, that contributed much to the rise in inflation after it rose 23% from a year ago as the recovering price of global crude oil pushed prices higher in Malaysia.
The Department of Statistics said that apart from transport, food and non-alcoholic beverages rose 4.1%, recreation services and culture 3%, health 2.6%, restaurants and hotels 2.3%, and housing, water, electricity, gas and other fuels 2.1%.
“The average price of one litre of RON95 petrol was RM2.29 in March 2017 compared with RM1.60 in March 2016. As for RON97, the average price increased to RM2.59 in March 2017 compared with RM1.95 in March 2016,” said the Department of Statistics in a statement yesterday.
Fuels and lubricants for personal transport equipment account for 7.8% of the CPI weights, it said.
In a note following the release of inflation data, Citi Research said the CPI for March suggests that Bank Negara’s recently published 2017 headline inflation forecast range of 3%-4% could be breached.
It sees headline inflation averaging 4.3% in 2017 from 2.1% last year, with inflation staying above 4% until October.
Citi Research said Bank Negara, which tends to look at demand-led inflation, is unlikely to raise interest rates following such high inflation, but core inflation is likely to test or even breach Bank Negara’s 2.5% comfort threshold in the coming months.
“On this front, incoming data for January-February suggests that the first-quarter (Q1’17) gross domestic product is on track to test or even breach the upper end of Bank Negara’s 4.3%-4.8% forecast range, helped by a turnaround in agricultural production, motor vehicle sales, financial services and a manufacturing recovery, while the Malaysian Institute of Economic Research’s consumer and business sentiment indices rose strongly in Q1’17,” it said.
“Alliance Bank chief economist Manokaran Mottain said he expects double-digit growth in the transport sector inflation rate in line with rising global crude oil prices. The economist said the transport sector inflation rate is about 16.4% so far this year compared to a negative 4.6% last year.
“However, the underlying inflationary trend remains manageable. Our adjusted CPI index, excluding the volatile food, beverages and transport sector, indicates that inflation only expanded 1.6% year-to-date as of end-March,” he said.
In the breakdown of inflation, the Department of Statistics said the rise in the index for food and non-alcoholic beverages, which accounts for 30.2% in the CPI weights, was led by oils and fats with a rise of 38.8%. The price of cooking oil was nearly 50% higher in March. The non-food index rose 5.6%.
It said the price of fish and seafood was 5.2% higher, followed by vegetables at 4.8%, meat 3.7% and fruits 3.7%.
Eating away from home cost more in March and showed an increase of 4.4%.
With prices rising nearly across the board, the department noted the other food items that saw a big increase in price. Apart from cooking oil, the price of watermelon was 15.4% higher, spinach 10.9%, prawn 9.1%, and a host of other foodstuff experienced substantial hikes in cost.
What was cheaper, though, were shallots, with its price falling 14%, big onions 4.6% and carrots 2.2%.
Among non-food items, clothes were 0.1% cheaper and the price of phones and telefax equipment dropped 2.3%.
“The increase in the index for food and non-alcoholic beverages was reflected in most states in Malaysia, especially those in highly urbanised states such as Kuala Lumpur, Selangor, Putrajaya, Penang, Johor and Malacca,” said the statement.