PETALING JAYA: Consumer prices rose last month following the increase in petrol prices. The weaker ringgit as well as the goods and services tax (GST) also contributed to inflationary pressure.
Data from the Statistics Department showed that the consumer price index (CPI), which gauges headline inflation, gained 2.5% in June compared with the same month a year ago with food and non-alcoholic beverages contributing to most of the rise in the index.
The 2.5% rise was slightly higher than economists’ assumption of a 2.4% increase. In the first-half of the year, inflation averaged 1.4%, largely due to lower petrol prices. Most do not expect Bank Negara to raise benchmark interest rates in September when the monetary policy committee meets.
Economists said the rise was due to the hike in petrol price from June 1 when RON95 and RON97 petrol saw a 10 sen increase to RM2.05 and RM2.35 respectively.
One economist with a foreign bank said the petrol price had quite a heavy weightage in the index. She said despite the decrease in the transport gauge in the latest data, the impact of the petrol price hike can be seen from the month-on-month inflation, with June prices up 0.6% compared with May when it slowed down sharply.
Alliance Research chief economist Manokaran Mottain told StarBiz that inflation could accelerate to between 3% and 4% on a monthly basis but this would not be reflected year-on-year. “Inflation is rising, if stripped of the food gauge, core inflation is up,” he pointed out.
Manokaran also said the transport gauge would see a rise in prices when the base effect from last year was erased. It contracted 1.4% year-on-year but the pace of decline has slowed when compared with May’s 4.7% contraction. On a month-on-month basis, it climbed 3%.
He said non-food inflation had escalated in recent months, to 2.1% in June from 0.3% in March. “This clearly suggests the building-up of price pressures from GST, which was implemented on April 1,” he said in a report following the release of the CPI data.
Citigroup Inc economist Kit Wei Zheng said that the GST impact on inflation may be fading, as excluding the petrol price effect, the month-on-month rise in inflation had not been significantly higher than the three-year historical average for June, suggesting that seasonal effects may have had a heavier weightage to inflation.
He said a further rise in petrol price in July would lift inflation higher.