CPI registers YoY increase of 0.6% in October


The Consumer Price Index (CPI) in October saw a year-on-year (YoY) increase of 0.6% to 120.7 versus the previous year’s 120, according to the Department of Statistics of Malaysia (DoSM).

On a monthly basis, October posted an increase of 0.2% versus September, while a 1.1% increase was recorded for the January-October period.

DoSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the increase in the overall index was due to the higher price for housing; water; electricity; gas and other fuels; food and non-alcoholic beverages; restaurants and hotels; education and transport.

“The overall index for food and non-alcoholic beverages which accounted for 29.5% in the CPI weights increased 1.2% in October 2018, which was driven by the increase of index for vegetables, as well as fish and seafood,” he said.

According to him, four states surpassed the national CPI rate of 0.6% recorded in October 2018.

“The states were Wilayah Persekutuan Kuala Lumpur, Negri Sembilan, Selangor and Wilayah Persekutuan Putrajaya and Penang. Johor showed the same rate as the national CPI,” he said.

Subsequently, the core index also registered a YoY increase of 0.4% in October.

“The core index, which excludes most volatile items of fresh food, as well as administered prices of goods and services, recorded changes ranging from -0.2% to 2.2% for the period January to October versus the corresponding period last year,” he said.

MIDF Research said the CPI is slightly than its forecast and matched market estimates.

“We have expected the inflation rate to continue on upward trend during the month. However, the threemonth high figure still remain below 1% for the fifth consecutive month despite the reintroduction of the Sales and Services Tax (SST), probably due to the significant impact of RON95 fuel subsidisation,” it said.

Meanwhile, RAM Rating Services Bhd expects the headline inflation rate to edge upwards to 2.7% in 2019.

Its research economist Woon Khai Jhek said this uptrend is backed by the additional pressure from the switch to targeted fuel subsidies, along with the anticipation of continued spillover effects from the SST reintroduction and the zero-rated Goods and Services Tax period’s low-base effects.

“Overall inflation is envisaged to average 1% in 2018 amid low food inflation, on top of the deflationary pressure from the reinstatement of fuel subsidies through the rest of 2018,” he said.

He added that the decision to float the price of RON95 based on the automatic price mechanism will lift headline inflation by 0.9% in 2019.

“We have conservatively assumed that the new mechanism will commence in the early second quarter of 2019 and that global oil prices will average around the same level next year at US$75 (RM314.25) per barrel,” he said.