Tuesday, 22 May 2018

(The Edge Financial Daily) Inflation ticking up to 1.6% in April — surveys


KUALA LUMPUR: Malaysia’s headline inflation, measured by the Consumer Price Index, is expected to come in higher at 1.6% in April, from 1.3% in March, consensus estimates show.

A Reuters poll showed yesterday the annual inflation rate is expected to have risen to 1.6% in April. Inflation was likely kept in check by steady fuel prices and a higher base in the year-earlier period, off setting higher food costs, economists surveyed in the poll said. Meanwhile, according to Bloomberg, economists expect April’s inflation at 1.6% year-on-year.

DBS Bank Ltd in a note to clients yesterday said inflation had bottomed, and it expects an inflation of 1.6% for April.

“Pre-election spending, and a general improvement in overall economic conditions and employment prospects are likely to lift price pressure. Oil prices are rising, which will push domestic pump prices higher,” DBS economist Irvin Seah said.

“The only mitigating factor is that the goods and services tax (GST) will be removed from June, which could see a one-off dip in inflation,” Seah added. Beyond the one-off impact of the GST, DBS reckoned that inflation will likely rise gradually towards year end.

In the first quarter of 2018 (1Q18), Malaysia’s inflation declined to 1.8%, from 3.5% in 4Q17, which reflected a smaller contribution of domestic fuel prices to headline inflation, according to data from Bank Negara Malaysia (BNM). BNM forecasts the country’s inflation to come in between 2% and 3% this year, from 3.7% in 2017. The central bank left its key interest rate unchanged at the last Monetary Policy Committee meeting on May 10, citing a lower inflation rate and steady economic growth after former prime minister Datuk Seri Najib Razak’s long-ruling coalition was ousted in a shock election upset a day earlier.

The Department of Statistics will release the inflation data for April tomorrow.