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Malaysia Inflation February 2018

Malaysia: Inflation falters in February

Consumer prices were unchanged from the previous month in February, which followed a 0.3% increase in January. Flat month-on-month price growth reflected sizeable declines in prices for transport and apparel offsetting higher costs for housing, water, electricity, gas and other fuels, as well as an increase in prices for food and non-alcoholic beverages.

Inflation decelerated markedly for a second consecutive month in February, coming in at 1.4% compared with 2.7% in January. A month-on-month decrease in fuel prices was compounded by a substantial base effect stemming from fuel price increases last year, which caused transport prices to swing from a 5.7% year-on-year increase in January to a 0.3% decrease in February. Food inflation was also weaker in February compared with January, adding less to the headline reading.

Inflationary pressures were, however, weaker across the board and not only in non-core prices. Core inflation, which excludes volatile products like fresh food and fuels, eased to 1.8% in February from 2.2% in January. A larger annual decline in clothing prices and weaker furnishing and restaurant prices weighed on February’s print. The aforementioned base effect on fuel prices should reverse in April, at which point inflation should trend upwards amid a relatively accommodative monetary stance and healthy domestic economic growth.

Malaysia Inflation Forecast

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