KUALA LUMPUR (March 31): The country’s headline inflation is anticipated to temporarily spike to above 5% in the second quarter of this year (2Q21) due to a lower base from low fuel prices in the corresponding quarter of 2020, and average between 2.5% and 4% in 2021.
Headline inflation, which measures total inflation within an economy, including commodities such as food and energy prices, was -1.2% in 2Q20 when the country went into a complete lockdown to curb the spread of the Covid-19 virus.
“In terms of trajectory, headline inflation is anticipated to temporarily spike to above 5% in 2Q21 due to a lower base from low domestic retail fuel prices in the corresponding quarter of 2020 before moderating thereafter,” BNM governor Datuk Nor Shamsiah Mohd Yunus said today.
Last year, the pump prices in Malaysia were about RM1.37 versus RM1.95 this year.
Hence, the governor asserted that the spike is temporary.
The government has set the ceiling prices for RON95 petrol at RM2.05 and RM2.15 per litre for diesel. Core inflation, however, is expected to remain subdued at 0.5%-1.5% this year, she said.
Core inflation measures the change in average consumer prices after excluding from the index certain items with volatile price movements such as fuel prices.
The outlook, however, is subject to global oil and commodity price developments.
Read more stories from the BNM Annual Report 2020 here.
