KUALA LUMPUR (April 23): Malaysia’s Consumer Price Index (CPI) is expected to show strong momentum for the next few months due to low base effects following the changes in domestic fuel prices after recording a 1.7% hike in March 2021, research firms said.
In a research note today, RHB Investment Bank Bhd said pump prices were cut to as low as RM1.25 per litre in April and hovered at that level for a couple of months last year before gradually picking back up.
It said that given the nature of the year-on-year (Y-o-Y) calculation, the impact is seen in March 2021 and would continue roughly until year-end.
“We anticipate that for the month of April and May this year, inflation could reach as high as between 4% and 4.5% Y-o-Y, before coming down to 3.3% in the second half of this year,” it said.
Meanwhile, MIDF Amanah Investment Bank Bhd expected the inflation rate to continue surging on the back of low base effect, rising global crude oil prices and gradual return in demand as the economy recovers.
It said Ramadhan and Hari Raya celebrations are likely to add some upward pressure particularly in food and non-alcoholic beverages.
“Generally, apart from the low base effect, inflationary pressures are expected to increase this year on the back of expansionary fiscal and monetary policies, higher commodity prices and returning demand as economy recovers.
“Successful vaccine roll out in the country will likely to improve sentiments and encourage spending,” it said.
MIDF Amanah reiterated its CPI inflation forecast at 2.3% Y-o-Y for this year.
Earlier today, the Department of Statistics Malaysia announced the CPI increased 1.7% to 122.9 in March 2021, the highest rate since May 2018, from 120.9 in the same month last year.
