Julia Goh, Senior Economist at UOB Group, and Loke Siew Ting, Economist at UOB Group, discuss the latest inflation numbers released in Malaysia.
“After reaching a four-year high of 4.7 percent y/y in April, headline inflation slowed to 4.4 percent y/y in May. The result was lower than our forecast and the Bloomberg consensus prediction (4.7 percent ). Inflation was slowed by lower food, retail fuel, and personal care expenses.”
“Despite the fact that headline inflation peaked in April, supply constraints (especially for food) generated by the almost one-month statewide complete lockout (FMCO) and rising global commodity prices continue to threaten the inflation outlook in the near term. Core inflation increased to 0.8 percent in May after staying at 0.7 percent for six months. In 2H21, we predict headline inflation to range between 3.0% and 4%, bringing average full-year inflation to 3.0% (BNM forecast: 3.0%) “.5% -4.0 percent; -1.2 percent in 2020).”
“For the second month in a row, real interest rates have been negative. Despite the increase in core inflation, due to high unemployment and spare capacity in the economy, underlying pricing pressure is projected to remain modest.”
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