THE spectre of inflation is again haunting the economy. Malaysia’s consumer inflation has risen to a six-year high of 3.1% in May, up from a benign 1% a year ago. The anxiety is also reflected in the MIER Consumer Sentiment Index (CSI), with about 80% of the households surveyed expecting further rise in future inflation.
The rise aside, the level of inflation reading, which is lower than conventional analysis would have predicted, is a subject of debate among many economic observers. Incidence like this points to the need for a reliable estimate of inflation, which is central to the conduct of sound monetary policy.
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