Malaysia: Inflation pressure is losing momentum – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assessed the latest inflation figures in Malaysia.

Key Quotes

“Consumer price index (CPI) fell further albeit by smaller magnitude of 1.9% y/y in June (May: - 2.9%). The decline came in line with ours (-2.0%) and market estimates (-1.8%). This marks the fourth month of deflation to bring average inflation to -2.6% in 2Q (1Q: +0.9%) and -0.8% in 1H20.”

“Key CPI components that contracted were transport, utilities, clothing and footwear, and furnishings, household equipment and maintenance.”

“We expect deflation trends to gradually ease as the domestic economy recovers. Headline inflation is expected to average -0.5% in 2020 (BNM forecast: -1.5% to +0.5%) with volatile global oil prices being a wildcard.”