Lower headline inflation of 0.8pc in June
KUALA LUMPUR: The headline inflation in June was lower at 0.8 per cent compared with 1.8 per cent in May, mainly due to a reduction in prices of goods and services following the zero-rating of the Goods and Services Tax (GST).
The drop was broad-based, with 11 of the 12 categories registering lower inflation, said Bank Negara Malaysia.
Core inflation, which excluded the impact of zero-rated GST, remained stable at 1.5 per cent in June, added the central bank in a statement yesterday.
Index of Distributive Trade growth moderated in May to 5.8 per cent from 6.4 per cent in April due to a decline in motor vehicle segment as consumers delayed purchases to benefit from the zero-rated GST that commenced on June 1.
Wholesale and retail segments, however, improved amid continued strength in trade activity and better consumer sentiment.
“The number of housing loan applications and approval of passenger car loans increased significantly in June by 15.3 and 21.9 per cent, respectively, mainly due to higher demand for financing during the tax holiday period,” it said.
Bank Negara said domestic financial markets in June continued to experience non-resident outflows amid renewed trade war concerns and expectations of a faster pace of United States monetary policy normalisation.
The domestic bond market, however, was supported by strong demand by domestic institutional investors.
During the month, Malaysian Government Securities yields declined by between 0.4 and 8.8 basis points.
The banking system’s asset quality remained sound in June, where the level of net impaired loans ratio and total provisions to total loans ratio was unchanged at 1.0 and 1.5 per cent, respectively.