Consumer prices up 3.7% in August
CPI higher for August due to fuel and transportation price hikes
PETALING JAYA: Malaysian consumers will continue to face higher living costs despite the seeming drop in August core inflation because of elevated fuel and transportation prices.
Data from the Statistics Department showed headline inflation as measured by the consumer price index (CPI) rose 3.7% in August from the same month a year ago while core inflation, which excludes more volatile food and fuel prices, was 2.4% higher. Compared to July, headline inflation was up 0.9%.
The rise in August’s headline prices was above the 3.4% expectations of economists surveyed before the data was released. In July, headline inflation was up 3.2% while core inflation, which indicates the prevalence of inflation, gained 2.6%. Price pressures, which had come off after headline inflation rose to a high of 5.1% in March, have been on the rise again since the middle of the year because of higher crude oil prices.
Brent, the global crude oil benchmark, has surged nearly 22% from the year’s low on June 21 to close at US$55.62 a barrel last Friday while in the same period, the US benchmark, WTI, has risen over 16% to close at US$49.89.
An economist said consumers should prepare for prices remaining elevated over the course of the year as fuel and transportation prices continue to rise.
“There’s a spillover effect (from transportation and fuel prices) on other prices in the CPI basket particularly for food,” he told StarBiz. Food and transportation costs make up 43.9% weightage of the CPI with food and non-alcoholic beverages alone making up 30.2% of the total CPI weightage.
An indication of the price pressures can be seen from the prices of everyday foodstuffs, with cooking oil prices surging 48.9% in August from the same month a year ago, after prices jumped 48.9% in July. The price of Indian mackerel, better known to locals as ikan kembung, rose 13.6% in August after prices gained 10.1% in July while the price of Spanish mackerel or ikan tenggiri, was up 6.4% in August after rising 5.5% in July.
For hardtail scad or ikan cencaru, the price was 7.7% higher in August compared to the 7.5% gain in July. For vegetable prices, round cabbage prices were up 4.7% in August, a reversal from the 0.7% drop in July prices while choy sum prices were up 2.6% in August after surging 8.8% in July.
AllianceDBS Research chief economist Manokaran Mottain has revised inflation for the year higher at 3.8% from 3.5% because of the higher average inflation in the first-half of 4.1% and the recent trend in the CPI. Bank Negara forecast inflation for the full-year at 3% to 4%.
Manokaran noted that the overall inflationary trend remains high and expects transport costs to pick up again reflecting the higher oil prices.
“Looking ahead, Brent crude oil prices will likely remain on an upward trend, mainly due to decreasing oil supplies by the Organisation of the Petroleum Exporting Countries (Opec) members coupled with growing global oil demand in 2017 and 2018, as projected by Opec,” he added.