PETALING JAYA: Headline inflation, as measured by the consumer price index (CPI), rose 3.2% in July compared with the same month a year ago on higher transport costs following the gains in fuel prices.
Core inflation, which excludes more volatile food and fuel prices, gained 2.6% in July compared with a year ago while compared with June, overall prices decreased 0.1%. Economists expected headline inflation to rise by 3.4% in July.
According to the Statistics Department, transport costs jumped 7.7% for the month under review while food and non-alcoholic beverages were up 4.2%.
“The average price of one litre of RON95 petrol was RM1.96 in July 2017 compared with RM1.75 in July 2016.
As for RON97, the average price increased to RM2.21 in July 2017 compared with RM2.10 in July 2016.
Fuels and lubricants for personal transport equipment accounted for 7.8% of the CPI weights,” it added.
Notably, food and non-alcoholic beverage costs increased in most states, especially in the highly urbanised places such as Kuala Lumpur, Selangor, Putrajaya, Penang, Johor and Melaka.
The Statistics Department also said the food away from home index continued to rise, increasing 4.9% in July.
MIDF Research, which noted that headline inflation was the lowest in six months, projected a slowing down of prices for the second-half of the year and has maintained an inflation forecast of 3.8%.
“The impact of cost-driven factors are tapering off due to slowdown in global commodity prices and the modest appreciation of the ringgit will tone down our inflation performance.
“We maintain our stance of no change in Malaysia’s monetary policy rate at 3.0% for the rest of 2017,” it added.
Meanwhile, in a separate announcement, the Statistics Department said the leading index (LI), which monitors economic performance in advance, increased by 0.6% in June on an annual basis.
However, compared with May, the LI posted a negative growth of 0.6% with real imports of semiconductors and expected sales value in the manufacturing sector weighing on the LI.
The coincident index (CI), which measures current economic activity, was 0.4% higher driven by an increase in the volume index of retail trade and factory output compared to the month before. On an annual basis, the CI rose 4% in line with economic growth in the second quarter.
The Statistics Department said the annual change of the LI and CI remained favourable but at a slower momentum compared with the previous month. It noted that economic activity “is expected to continue expanding throughout 2017”.