22 Jul 2020 / 19:39 H.

Malaysia’s consumer price index down 1.9% in June 2020 from a year ago

PETALING JAYA: Malaysia’s consumer price index (CPI) declined 1.9% in June 2020 to 119.1from 121.4 in the same month of the preceding year, driven by drops in transport (-14.3%), housing, water, electricity, gas & other fuels (-2.6%), clothing & footwear (-1.1%) and furnishings, household equipment & routine household maintenance (-0.2%) which contributed 45.7% to overall weight.

Nevertheless, food & non-alcoholic beverages continued to increase in June 2020 by 1.6% to 134.9 compared with 132.8 in June 2019. This group makes up 29.5% of CPI weight. Similarly, miscellaneous goods & services inclined by 3%, followed by communication (1.6%), health (1.1%) and education (0.8%).

Chief Statistician Malaysia Datuk Seri Mohd Uzir Mahidin said CPI without fuel is at a positive rate of 0.2% in June 2020 compared with 0.1% in May 2020. CPI without fuel covers all goods and services except unleaded petrol RON95, unleaded petrol RON97 and diesel.

The lower average price of RON95 in June 2020 which recorded RM1.54 per litre compared with RM2.08 in June 2019 contributed to the decrease of the transport and overall index. In addition, the average price of RON97 decreased to RM1.84 per litre from RM2.51 while diesel declined to RM1.71 per litre from RM2.18 in the corresponding month of the preceding year.

The core index rose 1.2% in June 2020 compared with the same month of the previous year.

Among the major groups which influenced the increase were miscellaneous goods & services (3%), communication (1.6%) and housing, water, electricity, gas & other fuels (1.4%).

The CPI on a monthly basis increased 1% compared with May 2020, attributed to transport (7.8%), food & non-alcoholic beverages (0.4%), miscellaneous goods & services (0.4%), furnishings, household equipment & routine household maintenance (0.1%), alcoholic beverages & tobacco (0.1%) and health (0.1%).

Meanwhile, the CPI in the second quarter of 2020 decreased 2.6% to 118.2 compared with 121.3 in the same quarter of the previous year. On a quarterly basis, the CPI decreased 3% compared with the first quarter of 2020.

The index for all states decreased between -1.3 and -2.7% in June 2020 compared with June 2019. The highest decrease was recorded by Sabah and Labuan (-2.7%), followed by Sarawak (-2.6%) and Malacca (-2.6%).

However, all states registered an increase in the index of food & non-alcoholic beverages. The highest increase was recorded by Selangor and Putrajaya (2.5%), Pahang (2.4%), Perak (2.2%), Johor (2%), Penang (1.9%) and Negri Sembilan (1.7%) and it surpassed the national index of 1.6% for food & non-alcoholic beverages in June 2020.

In a report, UOB Research said it expects deflation trends to gradually ease as the domestic economy recovers.

“Headline inflation is expected to average -0.5% in 2020 with volatile global oil prices being a wild card. Bank Negara Malaysia (BNM) cut the policy rate over the past four monetary policy meetings and kept the door open for further cuts. We see reasons to justify a pause in rates.

“However following the recent 25bps cut to 1.75% in July as well as official remarks, we think another rate cut on Sept 10 cannot be ruled out. Despite signs that economic activity has picked up and GDP contractions should be narrower in 3Q, officials sounded uncertain regarding the pace of recovery, lingering downside risks to growth, and concerns over the impact on borrowers when the loan moratorium ends in September. We maintain our year-end policy rate forecast at 1.5%,” it said.

The index for food & non-alcoholic beverages increased by 1.6% in June 2020. – REUTERSPIX

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