February CPI rises1.4%, comes in below forecasts

PUTRAJAYA: Malaysia’s Consumer Price Index (CPI) increased 1.4% in February 2018 compared with the same month last year, below the market expectation of 1.8% to 1.9%.

Chief Statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said among the main groups, the increases were in food and non-alcoholic beverages index (+3.0%), furnishings, household equipment & routine household maintenance (+2.1%), health (+2.1%), housing, water, electricity, gas & other fuels (+2.0%) and restaurants & hotels (+1.8%).

Core inflation rose 1.8% in February 2018 against the same month of the previous year.

The overall index was affected by the drop in the transport group by 0.3% in February 2018. Other groups which showed decreases were clothing and footwear (-0.7%) and communication (-0.5%).

Four states surpassed the CPI rise of 1.4%, namely Malacca (+1.8%), Selangor & Putrajaya (+1.7%), Johor (+1.5%) and Sabah & Labuan (+1.5%).

The CPI for the first two months of 2018 rose 2% compared with the same month last year.

Nomura Research expects headline CPI inflation in the near term to remain broadly stable in March before rebounding in April when the base effect will reverse.

For the full year, it forecast average CPI inflation of 3.0%. Core inflation should remain well behaved, even if it does creep higher, it said.

This supports the forecast that Bank Negara Malaysia will leave its policy rate unchanged at 3.25% for the rest of this year, Nomura said.