Malaysia's Nov inflation may have moderated

  • Business
  • Wednesday, 17 Dec 2014

PETALING JAYA: Malaysia’s inflation, as measured by the consumer price index (CPI), is likely to have moderated last month due to a high-base effect and slower increase in the prices of several key items in the basket of goods and services that make up the index.

A median estimate of 13 economists polled by Bloomberg puts the country’s CPI growth in November at a slower pace of 2.7%, compared with 2.8% in the preceding month.

The Statistics Department is scheduled to release the CPI numbers for November today.

“We see less inflationary pressure in these few months, as most households have started holding back their expenses in anticipation of the upcoming implementation of goods and services tax (GST),” an analyst from M&A Securities Sdn Bhd told StarBiz.

“In addition, the retail pump prices have remained fairly modest since the last increase in RON95 and diesel prices (of 20 sen per litre respectively) in October,” she said.

Several economists polled by StarBiz noted that the CPI increase would likely remain below 3% in the coming months as the effect of lower fuel costs amid the global oil price plunge and the trend of “low” inflation, however, was unlikely sustainable due to the impending GST, which would come into effect on April 1.

The retail prices of RON97 and RON95 petrol were cut by nine sen and four sen per litre to RM2.46 and RM2.26, respectively, on Dec 1, but the price of diesel was raised by three sen to RM2.23 per litre.

Since the start of this month, the Government had scrapped all subsidies for RON95 petrol and diesel. The retail prices for RON95 petrol and diesel would be fixed according to a managed float, similar to the mechanism dictating the RON97 petrol price since July 2010.

“This somewhat ‘low’ inflation will only be a temporary phase, thanks to falling global commodity prices that have provided some relief to our pockets … but who knows how long this unfavourable cycle for global commodities is going to last,” an economist with a local bank said.

“Regardless, we expect the CPI to spike when the GST comes into force in the second quarter of next year,” he explained, noting that an unexpected strong rebound of global commodity prices, if it happened, would exacerbate the pressure on inflation.

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