Headline inflation eases further in July
> Consumer price index growth moderated to 3.2% year-on-year, signalling abating market turbulence
PETALING JAYA: FXTM says headline inflation at significantly below the eightyear high of 5.1% seen in March likely signals that Malaysia has passed the market turbulence encountered by global markets as a whole before Donald Trump was inaugurated as US president in January.
Malaysia’s consumer price index (CPI) growth moderated to 3.2% year-on-year (yoy) in July compared with 3.6% in June 2017.
Corporate Development and Market Research vice-president Jameel Ahmad said in a note yesterday the easing in headline inflation reading represents the fourth month in succession that it has dipped, a trend he believes can be linked to the gradual recovery in the ringgit over recent months.
“Inflation appears to be under control, gross domestic product growth is trending higher and I still feel the ringgit is undervalued when looking at its robust fundamentals,” he added.
The ringgit traded at 4.283 to the dollar yesterday.
The Department of Statistics did however state that the index of transport group showed a significant increase of 7.7% yoy in July 2017, after rising 10.5% in June 2017.
This was due to higher fuel prices, whereby the average price of a litre of RON95 was RM1.96 in July 2017 compared with RM1.75 in July 2016, while the average price of RON97 increased to RM2.21 in July 2017 compared with RM2.10 in July 2016.
Other major groups that recorded increases were food & non-alcoholic beverages (+4.2%), health (+2.9%), recreation services & culture (+2.6%), restaurants and hotels (+2.6%) and furnishings, household equipment & routine household maintenance (+2.6%).
Core inflation, which excludes most volatile items of fresh food, as well as administered prices of goods and services, was up by 2.6% in July 2017 compared with the same month of the previous year.
Meanwhile, CPI for the period of January to July 2017 registered a 4% rise compared with the same period last year.