Malaysian inflation remains subdued, September CPI down 1.4% from a year ago

Cornelia Mascio
Ottobre 23, 2020

Earlier today, the Department of Statistics Malaysia (DoSM) announced that Malaysia's inflation, as measured by the Consumer Price Index (CPI), slipped 1.4 per cent year-on-year to 120.1 in September against 121.8 in the same month last year, but was unchanged compared with August this year. The latest revision will take the current scenario closer to the base year and thus the rate of inflation will be more realistic.

Commenting on the change after releasing the new series, Labour Minister Santosh Kumar Gangwar said data on all aspects of labour are crucial as inputs in policy making and this justifies the existence of an organisation like the Labour Bureau, dedicated to labour and price statistics.

Clothing and footwear prices fell 4.1 percent in September, down from a 1.3 percent decrease in August.

"Additionally, the implementation of the government's electricity bill discounts until the end of the year will cushion the impact of utility charges on consumers, hence, contributing to downward pressure on the Consumer Price Index (CPI)", it said.

The UK's inflation rate, which tracks the prices of goods and services, climbed to 0.5% in September, from 0.2% in August.

The average price of unleaded petrol RON95 in September 2020 decreased to RM1.68 per litre compared with RM2.08 in September 2019.

Demand for second-hand cars and the closing of the Eat out to Help out scheme at the end of August resulted in a jump in monthly inflation in September, but price rises are still well below trend and suggest the Bank of England has scope to ease monetary policy further.

Price increases of food items were reported for vegetables, coconuts, big onions, fresh fruits, turmeric powder, rice, biscuits, papadam, jak and jak seeds, and rice flour.

This was partially offset by smaller downward contributions from furniture, household equipment and maintenance; games, toys and hobbies; and food and non-alcoholic beverages. The highest increase was recorded by Selangor & Putrajaya (2.4 per cent), Terengganu (1.6 per cent), Johor (1.5 per cent) and Perak (1.5 per cent).

The hope is that by keeping its rate low, the central bank can drive down rates on mortgages and loans to make it easier for people to borrow and spend to aid the economy as it recuperates from the COVID-19 crisis.

UOB Research said the overall inflation environment is expected to remain subdued and well anchored around BNMs target of -1.5% to +0.5% in 2020, following elevated unemployment, slower and uneven domestic economic recovery, and lower global oil prices.

"We maintain our 2021 full-year inflation at 2.1%".

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