Malaysia: Inflation climbs higher in January
February 21, 2020
Consumer prices increased 0.1% over the prior month in January, down from December’s 0.2% rise. Lower prices for clothing and footwear and alcoholic beverages and tobacco were partially offset by higher prices for education and miscellaneous goods and services.
Inflation jumped to 1.6% in January from 1.0% in December. Meanwhile, annual average inflation edged up to 0.9% from 0.7%. Going forward, price pressures should increase but only gradually due to the Bank’s recent monetary easing, a weaker ringgit and a base effect from low oil prices in 2019.
Turning to implications for the Bank’s next monetary policy meeting on 2 March, analysts at Nomura noted:
“We believe inflation remains consistent with Bank Negara Malaysia’s? (BNM) assessment that average headline inflation will be higher in 2020 ‘but remain modest’. We still forecast another 25bp BNM policy rate cut in Q2 after its cut on 22 January as a preemptive response against the impact of the COVID-19 outbreak.”
Author: Lindsey Ice, Economist