Malaysia’s July CPI rises 1.4% year-on-year

PETALING JAYA: Malaysia’s Consumer Price Index (CPI) rose 1.4% in July 2019 to 121.5 from 119.8 in the same month of the preceding year.

The increase in the overall index was driven by the index of furnishings, household equipment & routine household maintenance (3.3%), food & non-alcoholic beverages (2.4%), recreation services & culture (2.4%), alcoholic beverages & tobacco (2.3%) and communication (2.1%).

“Out of 552 items covered in CPI, 394 items showed an increase in July 2019 as against July 2018. On the contrary, 120 items declined while 38 items were unchanged,” chief statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said in a statement today.

On a monthly basis, the CPI rose 0.1% as compared to June 2019, mainly supported by the index of food & non-alcoholic beverages (0.3%), furnishings, household equipment & routine household maintenance (0.2%) and transport (0.2%).

Meanwhile, the CPI for the period of January to July 2019 increased 0.3% compared with the same period last year.

Four states/territories – Kuala Lumpur (2.2%), Penang (2.1%), Selangor & Putrajaya (1.7%) and Johor (1.5%) – surpassed the national CPI rate of 1.4% in July 2019 compared with July 2018. The indices for Negri Sembilan and Perak showed the same rate of increase as the national CPI.

All states registered increases in the index of food & non-alcoholic beverages. The highest increases were recorded by Kuala Lumpur (4.4%), Penang (3.0%), Johor (2.7%) and Selangor & Putrajaya (2.6%) and the increase surpassed the national index of food & non-alcoholic beverages in July 2019.

UOB Research expects inflation to inch up gradually towards year-end as the favourable low base effects should fully fade by September.

The research house said the government will soon announce its targeted fuel subsidy scheme that may see the price cap on RON95 petrol and diesel lifted once the scheme comes into effect. “Based on current Brent oil prices of around US$58-60 per barrel, we estimate a petrol subsidy of around 20 sen/litre by the government.”

Meanwhile, it opined that the departure levy on all air travellers leaving Malaysia, which is expected to take effect in September, is unlikely to have a significant impact on transport price inflation or overall headline inflation as air transport services carry a small weightage of 0.4% in the CPI basket.

UOB Research is maintaining its 2019 full-year inflation forecast at 0.8%.

On the monetary policy front, it said Bank Negara Malaysia is less likely to pursue another rate cut in the upcoming Monetary Policy Committe meeting on Sep 12 despite the synchronised rate reductions by four central banks last week.

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