CPI moderated by 2.2% in July, LI indicates economic challenges

by SHAHEERA AZNAM SHAH & LYDIA NATHAN / pic by MUHD AMIN NAHARUL

MALAYSIA’S Consumer Price Index (CPI) moderated by 2.2% in July 2021 to 122.5 compared to 119.9 in July last year due to the monthly electricity bill discount given to domestic consumers, said Department of Statistics Malaysia (DoSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin.

Mohd Uzir said the CPI remained positive for the sixth consecutive month since February 2021 due to the lower base effect last year.

“Among the reasons for the moderate increase was the monthly electricity bill discount given to domestic consumers under the Perlindungan Rakyat dan Pemulihan Ekonomi (Pemulih) package for a period of three months effective July 1, 2021.

“Nevertheless, the CPI remained in the positive territory as there were increases in petrol and diesel prices in July 2021 compared to a year ago.

“The increase was mainly driven by a double-digit increase of 11.6% in the transport group due to the setting of the RON95 petrol ceiling price to RM2.05 per litre since March compared to the average price of RM1.69 in July 2020,” he said in a statement yesterday.

Meanwhile, the CPI for January to July 2021 increased 2.3% compared to the same period last year. On a monthly basis, CPI decreased by 0.6% compared to June 2021.

Mohd Uzir said the decrease was attributed to the negative rate of housing, water, electricity, gas and other gases (2.5%), and alcoholic beverage and tobacco (0.1%).

“Five states and one federal territory namely Terengganu (2.8%), Pahang (2.5%), Selangor and Putrajaya (2.4%), Kelantan (2.4%) and Sarawak (2.3%) surpassed the national CPI rate of 2.2% in July 2021 compared to the same month of the previous year,” Mohd Uzir said.

Meanwhile, Malaysia’s Leading Index (LI) continued to register positive growth in June 2021, with an increase of 0.5% to 105.6 points from 105.1 points in June 2020.

DoSM said the increase was mainly contributed to the real imports of other basic precious and other non-ferrous metals driven by the import of copper-based metals.

Mohd Uzir added that LI declined 2.8% month-on-month, reflected by the reduction in all of LI components mainly number of housing units approved.

“Looking at the direction indicated by the decreasing growth rate of smoothed LI despite remained above the trend, it indicates Malaysia’s near-term economic prospects continue to face challenges. This is in line with the forecasts by international and national agencies that expect a slower economic outlook for Malaysia in 2021,” he said in a separate statement.

Meanwhile, he noted the Coincident Index (CI) maintained its positive annual momentum for the past three months while posting negative 3% in June 2021 following the implementation of the Movement Control Order.

“The performance of CI which reflects the current economic activity further decreased to negative 6.3% month-on-month as against a decline of 1.3% recorded in the preceding month, due to the noticeable decline in the capacity utilisation in the manufacturing sector of 4.5%,” he noted.