UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting reviewed the recent inflation figures in the Malaysian economy.
Key Quotes
“Consumer price index (CPI) continued to contract by -1.4% y/y in Sep (Aug: -1.4% y/y). This came in a tad lower than our estimate… The steady deflation rate was primarily due to the persistent decline in prices of non-food items (particularly fuel, electricity, purchase of vehicles, clothing & footwear, and accommodation services) that counterbalanced the rise in food products.”
“The overall inflation environment is expected to remain subdued and well anchored around Bank Negara Malaysia’s (BNM) target of -1.5% to +0.5% in 2020. This follows elevated unemployment, slower and uneven domestic economic recovery, and lower global oil prices. Year to date (YTD), deflation rate is at -1.0% in Jan-Sep. Given an extension of electricity bill discounts until end-Dec 2020 and the resurgence of COVID-19 cases, we revise our full-year deflation projection to -1.0% (from -0.5% previously). We project 2021 full-year inflation at +2.1% (BNM forecast: +1.0% to + 3.0%).”
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