April inflation eases to 4.4% as transport costs slide

PETALING JAYA: Malaysia’s inflation rate as measured by the consumer price index (CPI) moderated to 4.4% in April from 5.1% in March, due to a steep contraction in transport prices.
Transport inflation growth slowed to 16.7% compared with the past two months, MIDF Research said, indicating that cost-driven factors are cooling off with retail fuel price year-on-year differential gradually converging in April.
Moving forward, the research house foresees the inflation rate moderating but uncertainty in global oil prices having a substantial impact on broader price trends.
It also said that the weekly pricing of fuel also eases inflationary pressure, causing a delay in the spill over effects to consumers and businesses, while cost-push inflation is not expected to have a material impact on the broader price trend.
Given the stable demand conditions, it does not foresee current inflationary concern affecting Bank Negara’s existing monetary stance.
According to the Department of Statistics, among the major groups which recorded increases were transport (16.7%), food and non-alcoholic beverages (4.1%), recreation services and culture (3%), health (2.8%), restaurants and hotels (2.4%) and housing, water, electricity, gas and other fuels (2.2%).
CPI for the January-April period registered an increase of 4.3% compared with the same period last year. The index for food and non-alcoholic beverages were the main contributor to the CPI rise during the period, registering an increase of 4.1%.
Food inflation increased by 0.1% on a monthly basis. All food prices increased at stable rates during the month, with fresh fish and seafood seeing the highest growth at 6.6% and 6.2%.

The stabilised food inflation could be due to a gradual pick-up in demand and also lesser impact from fuel price shocks. However, MIDF opines food inflation expanding higher in May and June as Ramadhan and the Aidilfitri celebrations create extra demand on goods, especially food.
Nevertheless, the department said core inflation remained stable at 2.5% in April 2017 against the same month last year.
Core inflation, which excludes most volatile items of fresh food as well as administered prices of goods and services, recorded changes ranging from 2.3% to 2.5% between January and April 2017 compared with the same period year ago.