Malaysia still in deflation as CPI drops

According to DoSM, the June CPI dropped to 119.1 against 121.4 recorded last year

by ASILA JALIL/ pic by TMR FILE

MALAYSIA remained in deflation in June as the Consumer Price Index (CPI) declined 1.9% year-on-year due to the decline in the transport sector.

According to data from the Department of Statistics Malaysia (DoSM) yesterday, the CPI — which measures the country’s inflationary level — dropped to 119.1 against 121.4 recorded in June last year.

“The decrease in the overall index was driven by the decline in transport (-14.3%), housing, water, electricity, gas and other fuels (-2.6%), clothing and footwear (-1.1%), and furnishings, household equipment and routine household maintenance (-0.2%), which contributed 45.7% to the overall weight,” said chief statistician Datuk Seri Dr Mohd Uzir Mahidin in a statement yesterday.

Food and non-alcoholic beverage component continued to increase in June by 1.6% to 134.9 versus 132.8 last year, and contributed 29.5% of CPI weight. Similarly, miscellaneous goods and services also rose 3%, followed by communication (1.6%), health (1.1%) and education (0.8%).

The core index rose 1.2% in June influenced by the increase in miscellaneous goods and services (3%), communication (1.6%), and housing, water, electricity, gas and other fuels (1.4%).

On a monthly basis, the index increased by 1% against May 2020, attributed by a 7.8% increase in transport, food and non-alcoholic beverage (0.4%), miscellaneous goods and services (0.4%), furnishings, household equipment and routine household maintenance (0.1%), alcoholic beverages and tobacco (0.1%), and health (0.1%).

The data also revealed CPI without fuel stood at a positive rate of 0.2% in June compared to 0.1% in May 2020.

CPI fell 0.2% as fuel costs fell in line with the drop in global oil prices. The index further slipped 2.9% in April and May, which was the lowest rate of change since 2010.

“Meanwhile, CPI in the second quarter of 2020 (2Q20) decreased 2.6% to 118.2 compared to 121.3 in the same quarter of the previous year. On a quarterly basis, the CPI decreased 3% compared to 1Q20.”

The index for all states dropped between -1.3% and -2.7% in June led by Sabah and Labuan (-2.7%), followed by Sarawak (-2.6%) and Melaka (-2.6%).

All states, however, registered an increase in the index of food and non-alcoholic beverage, with Selangor and Putrajaya recording the highest increase by 2.5%, followed by Pahang (2.4%), Perak (2.2%), Johor (2%), Pulau Pinang (1.9%) and Negri Sembilan (1.7%).

DoSM also revealed on Tuesday that the country’s gross fixed capital formation (GFCF) posted a negative growth of 2.1% last year against 1.4% in 2018 due to lower acquisition of fixed assets in the manufacturing, as well as mining and quarrying sectors.

GFCF is the second-largest component in the GDP with 23.1%.

“In 2019, Malaysia’s GFCF at current prices recorded RM346.8 billion with a decrease of RM3.5 billion in 2018, and GFCF at constant prices amounted to RM328.4 billion,” said Mohd Uzir.

He said investment in the manufacturing sector contracted to 10.1% last year from 2.6% in 2018 due to the decline of 16.9% in petroleum, chemical, rubber and plastic products.

Electrical, electronics and optical products, as well as transport equipment also dragged the overall performance of the sector by contracting 6.8% last year compared to a contraction of 2.5% a year prior, whereas non-metallic mineral products contracted 7.4%, while basic metal and fabricated metal products, along with textiles and wood products, declined 7.6%. Services sector eased to 1.5% last year versus 5.5% in 2018 due to slower performance in finance, insurance, real estate and business services.

“In 2019, the mining and quarrying sector improved to -9.1% from a negative growth of -11% in the preceding year. The construction sector decreased 1.4% compared to 4.3% in 2018.”

As for the agriculture sector, it posted a growth of 0.2% last year compared to a contraction of 1.8% in 2019 due to a positive growth in livestock and fishing by 5.3%.

He added that the private sector, which contributed 72.8% into the GFCF, was the main impetus for Malaysia’s investment with a growth of 1.6%. The public sector, however, recorded a smaller portion by contributing 27.2%.

The services and manufacturing activities were the main drivers in GFCF of the private sector, where the share of services activities contributed 61.5% in 2019 compared to 58.4% in 2018.

“GFCF of the public sector was largely dominated by services, and mining and quarrying activities with a share of 77.5% and 13.9% respectively. Meanwhile, manufacturing activities registered a share of 8% against 8.7% in 2018,” added Mohd Uzir.