June inflation seen similar to May’s
PETALING JAYA: Malaysia’s headline inflation as measured by the consumer price index (CPI) for June is expected to be unchanged from May at 3.9% year-on-year, according to a survey of economists.
The Statistics Department will be releasing the CPI data today, showing that headline inflation continues to come down on lower fuel prices and a stabilising ringgit.
Most economists believe that headline inflation peaked in March at 5.1% as prices of fuel went up and the ringgit topped 4.40 to the US dollar on average over the three months to March.
With the weaker greenback and fuel prices, economists now see upward price pressures easing, albeit at elevated levels. However, there are concerns over core inflation, which excludes volatile food and fuel prices.
Core inflation rose 2.6% in May, higher than Bank Negara’s threshold of 2.3% to 2.5%, while the central bank’s everyday price inflation and perceived price inflation capturing frequently purchased items of the CPI basket have been persistently higher than the CPI, indicating higher inflation expectations.
Given the better economic growth outlook following the unexpected first-quarter expansion of 5.6% in gross domestic product and wages rising, economists expect private consumption to sustain, which may towards year-end and the beginning of 2018 contribute to demandpull inflation as costs come down.
The central bank expects headline inflation to moderate in the second half of the year and core inflation to be contained.