Malaysia’s August inflation dropped 1.4%

The CPI fell to 120.1 against 121.8 registered in August 2019, according to DoSM’s chief statistician


MALAYSIA’S inflation as measured by Consumer Price Index (CPI) declined 1.4% year-on-year (YoY) in August 2020, dragged by the drop in the transport segment, according to the Department of Statistics Malaysia (DoSM).

Its chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the CPI, which measures the country’s inflationary level, fell to 120.1 against 121.8 registered in August 2019.

“The decrease in the overall index is attributed to the decline in transport (-9.9%), housing, water, electricity, gas and other fuels (-3%), clothing and footwear (-0.6%), and furnishings, household equipment and routine household maintenance (-0.1%) which contributed 45.7% to overall weight,” he said in a statement yesterday.

The index for food and non-alcoholic beverage, however, increased 1.3% to 135.2 versus 133.5 last year, which contributed 29.5% of CPI weight. Miscellaneous goods and services also rose 3.1%, followed by communication (1.6%), health (1.1%) and education (1.1%).

The CPI on a monthly basis increased 0.2% in August compared to the previous month — attributed to miscellaneous goods and services (0.7%), transport (0.4%), housing, water, electricity, gas and other fuels (0.2%), food and non-alcoholic beverage (0.1%), alcoholic beverages and tobacco (0.1%), health (0.1%), and restaurants and hotels (0.1%).

The CPI without fuel also improved on a monthly basis, registering a positive rate of 0.2% in August 2020 compared to July. CPI without fuel covers all goods and services except unleaded petrol RON95 and RON97, and diesel.

The average price of RON95 last month decreased to RM1.68 per litre versus RM2.08 a year ago, average price for RON97 dropped to RM1.98 per litre against RM2.51 last year, while price of diesel slid to RM1.81 per litre from RM2.18.

Core index rose 1.1% last month influenced by miscellaneous goods and services (3.1%), communication (1.6%), health (1.1%) and education (1.1%).

Meanwhile, CPI for the January to August period this year slipped 1% compared to the same period last year attributed to transport (-10%), clothing and footwear (-1%) and housing, water, electricity, gas and other fuels (-1%).

The index for all states also dropped between -0.7% and -2.2% last month compared to August 2019.

The highest drop was recorded by Melaka, as well as Sabah and Wilayah Persekutuan Labuan with -2.2% each. It is followed by Kedah, Perlis and Sarawak (-2.1%).

All states, however, recorded an increase in the index of food and non-alcoholic beverage with the highest increase recorded by Selangor and Wilayah Persekutuan Putrajaya (2.3%), followed by Johor (1.7%), Terengganu (1.5%), Perak (1.4%), Negri Sembilan (1.4%) and Pahang (1.4%), and the increase surpassed the national index (1.3%).

Following the drop in CPI, MIDF Amanah Investment Bank Bhd revised downwards its estimated CPI changes to a higher decline of -1% YoY this year from the previous forecast of -0.5%.

The firm stated that improvement in oil prices is anticipated to remain “sluggish” on mounting demand concerns mainly over surging of Covid-19 cases.

“In addition, the implementation of government’s electricity bill discounts until the end of the year will cushion some impact of utilities charges on the consumers, hence contributing to downward pressure to the CPI.

“Despite Malaysian consumers resuming their spending activities, we opine that the recovery for spending on non-essential items and the overall domestic expenditures will take time to fully recover,” it said in a note yesterday.

It added that Bank Negara Malaysia may also stop further easing for the rest of the year following a gradual recovery in economic activities.

The cumulative cut of 125 basis points in the Overnight Policy Rate this year is adequate to provide monetary policy support to the economy, the research firm said.