by ASILA JALIL / pic by RAZAK GHAZALI
MALAYSIA continued to face deflationary pressures for the seventh straight month in October with the decline in Consumer Price Index (CPI) by 1.5% year on year (YoY) to 120.2.
The deflation reading was largely attributed to cheaper non-food items particularly fuel, electricity and passenger vehicles amid softer demand that was exacerbated by lower-income and cautious sentiment.
“Out of 552 items covered in CPI, 337 items showed an increase in October 2020 against October 2019. On the contrary, 150 items declined, while 65 items were unchanged.
“Based on the performance of the 552 items by category of goods and services, non-durable goods (296 items) is a category that experienced the most price increased with 208 items, 73 items decreased and 15 items were unchanged compared to services, semi-durable goods and durable goods,” chief statistician Datuk Seri Dr Mohd Uzir Mahidin said in a statement yesterday.
The food and non-alcoholic beverage category rose by 1.5% to 135.2 compared to 133.3 in October last year. It accounted for 29.5% of CPI weight.
Miscellaneous goods and services also increased by 2.8%, followed by education (0.7%), and alcoholic beverages and tobacco (0.5%).
“The CPI without fuel showed a positive rate of 0.1% in October 2020 compared to October 2019. CPI without fuel covers all goods and services except RON95, RON97 and diesel,” said Mohd Uzir.
The average price of RON95 decreased to RM1.67 per litre last month compared to RM2.08 in October 2019. The average price of RON97 dropped to RM1.97 per litre versus RM2.66 previously, while diesel dropped to RM1.72 per litre from RM2.18 in the corresponding month last year.
Core index increased 0.8% in October, and among the groups that contributed to the incline were miscellaneous goods and services (2.8%), food and non-alcoholic beverage (1.3%), housing, water, electricity, gas and other fuels (0.9%), and education (0.7%).
However, the index for the period of January until October 2020 dropped 1% compared to the same period last year attributed to transport (-10%), housing, water, electricity, gas and other fuels (-1.5%), and clothing and footwear (-0.8%).
“Although YoY CPI decreased, CPI on a monthly basis increased by 0.1% compared to September 2020.
“The increase was attributed to alcoholic beverages and tobacco (0.1%), recreation services and culture (0.1%), and health (0.1%).”
The index for all states dropped between -0.8% and -2.3% last month. Melaka, Sabah, Labuan, Kedah and Perlis all recorded a drop of -2.3%, followed by Sarawak (-2.1%), Johor (-2.1%) and Negri Sembilan (-2%).
All states, however, registered an increase in the index of food and non-alcoholic beverage. The highest increase was recorded by Selangor and Putrajaya at 2.4%, followed by Pahang (1.8%), Terengganu (1.7%), Perak (1.7%) and Negri Sembilan (1.6%).
Meanwhile, Mohd Uzir said the country’s Leading Index (LI) increased 8.6% to 109.5 points in September 2020 from 100.8 points in the same month last year.
The LI performance is used to predict the economic direction in an average of four to six months ahead.
“The monthly change of LI showed the same trend, rising at 0.9% (August 2020: -0.5%). Real imports of semiconductors, particularly electronics integrated circuits, were among the components that propel the growth of LI.
“Correspondingly, the number of new companies registered, especially in the wholesale and retail trade subsector, significantly contributed to the increase,” he said.
He said the growth rate of the index remained above trend, reflecting Malaysia’s continuous economic recovery despite the challenging circumstances amid the pandemic. However, he noted that the rising number of Covid-19 cases and extension of the Conditional Movement Control Order may dampen the LI signal.
The manufacturing sales value also increased in September by 3.7% to register RM121.2 billion. This rise was driven by the increase in transport equipment and other manufactured products (14.3%), food, beverages and tobacco products (14.2%), and electrical and electronics products (7.2%).