by NUR HANANI AZMAN

Malaysia’s headline inflation is anticipated to temporarily spike to above 5% in the second quarter of this year due to a lower base from low fuel prices in the corresponding quarter of 2020, and average to between 2.5% and 4.0% for 2021.

Bank Negara Malaysia (BNM) Governor Datuk Nor Shamsiah Mohd Yunus said headline inflation, which measures the total inflation within an economy, including commodities such as food and energy prices, was -1.2% in the second quarter of 2020 where the country went into a complete lockdown to curb the spread of the Covid-19.

“In terms of trajectory, headline inflation is anticipated to temporarily spike above 5% in the second quarter of 2021 due to the lower base from the low domestic retail fuel prices in the corresponding quarter of 2020 before moderating thereafter.

“Last year, the pump prices in Malaysia were about RM1.37 versus RM1.95 this year. Hence, the spike is temporary,” she said in a virtual press conference on BNM Annual Report 2020 today.

The Malaysian economy is projected to expand between 6% and 7.5% in 2021 compared with a contraction of 5.6% in 2020, supported by both external and domestic factors fuelled by vaccine rollout.

The construction sector is expected to grow 13.4% in 2021 compared with -19.4% in 2020 while the services sector to expand 6.6% in 2021 (-5.5% in 2020).

The manufacturing sector to improve 8.8%  (-2.6% in 2020) and the agriculture, forestry and fishery sector to gain 4.2% in 2021 from -2.2% in 2020.

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