PETALING JAYA: Headline inflation, as measured by the change in the consumer price index (CPI), eased slightly last month, after remaining stable at the same rate for the previous three months.
The Statistics Department revealed that the CPI growth slowed to 1.9% year-on-year (y-o-y) in August from 2% y-o-y in May to July. The latest reading came in below the 2% y-o-y increase predicted in a Reuters’ survey of economists.
According to MIDF Research, the limited rise in CPI suggested that the policy adjustments, such as subsidy re-targeting, tariff hikes and service tax rate increase, had not led to a sharp spike in general prices.
“Nevertheless, we continue to expect the policy changes will be the main factor that would gradually push inflation higher, particularly the non-food component,” the brokerage said.
“As we approach the fourth quarter of 2024 (4Q24), we foresee further subsidy rationalisation involving the rollout of targeted RON95 petrol subsidies, which will also add to inflationary pressures.
“Subject to further announcements by the government, we expect the RON95 price adjustment to be incremental based on the managed float mechanism,” it explained.
MIDF Research maintained its 2024 headline CPI growth projection at 2.3%, given the relatively moderate inflation at 1.8% for the first eight months of the year.
Last year, Malaysia’s CPI increased by 2.5%.
“While we still expect the targeted subsidy for RON95 will be implemented in 4Q24, the stable inflation thus far suggests the spillover inflationary pressures from policy changes have been limited,” it said.
“On the other hand, if the government decides to delay the subsidy rationalisation for RON95, the full-year CPI inflation could be 0.2 percentage point lower than our existing forecast,” it added.
In a statement, the Statistics Department said August’s inflation was driven by increases in the main groups of restaurant and accommodation services (3.2%); personal care, social protection and miscellaneous goods and services (3.2%); housing, water, electricity, gas and other fuels (3.1%); and recreation, sports and culture (2%).
Other main groups recorded an increase rate below the overall inflation rate of 1.9%, while clothing and footwear remained at negative 0.2% in August 2024, it added.
Chief Statistician Datuk Seri Mohd Uzir Mahidin stated that inflation for restaurant and accommodation services eased to 3.2% in August from 3.4% in July, due to the slower increase in the main subgroup of beverage preparation services at 4.2% compared with 4.3% in the previous month.
Meanwhile, the inflation for personal care, social protection and miscellaneous goods and services was steady at 3.2%, driven by the expenditure class of jewellery and watches at 17.5% in August, compared with 18.1% in July.
The food and beverages group, which contributes 29.8% of the total CPI weight, increased by 1.6% in August, the same rate as recorded in July.
Inflation for transport increased 1.3% last month, as compared to 1.2% in July, driven by the main subgroup of operation of personal transport equipment which increased to 1.8%.
Among the items that recorded an increase were diesel and unleaded petrol RON97.
Last month, the average price for diesel in Peninsular Malaysia was RM3.27 per litre as compared to RM2.15 per litre in August 2023 (July 2024: RM3.35 per litre).
For Sabah, Sarawak and Wilayah Persekutuan Labuan, the price remained at RM2.15 per litre.
In addition, the average price of unleaded petrol RON97 in August 2024 was RM3.47 per litre against RM3.37 per litre in August 2023 (July 2024: RM3.47 per litre).
In comparison to the inflation in other selected countries, Malaysia’s headline CPI in August was lower than that in Indonesia (2.1%), Vietnam (3.5%) and the Philippines (3.3%) as well as South Korea (2%).
However, Malaysia’s August inflation rate was higher than China (0.6%) and Thailand (0.4%).
