Economic Update: Inflation Up a Tick at 3.3% in Aug

Posted on: 2014-09-18

KUALA LUMPUR: CIMB Research said headline inflation recorded a slight uptick to 3.3% yoy in August, within its expectations as well as the market's.

In a note on Thursday, CIMB said growth in utility, food, and transport prices quickened, as well as furniture, education, and restaurants. 

Meanwhile, core inflation, a proxy for demand-pull inflation, edged up to 2.6%. 

"Despite the hike in cigarette prices in September and potential fuel subsidy cuts in 4Q14, we expect headline inflation to average a lower 2.9% in Sep-Dec due to last year's high base. 

"We think BNM may stand pat on rates tomorrow given recent softer data points," it said. 

Compared to the previous month, the consumer price index (CPI) quickened to 0.2% while core inflation edged up to 2.6% yoy from 2.5% in July.

The research house explained that the inflation uptick was due to higher growth in prices of utilities, food & non-alcoholic beverages and transport.

Prices of most foods accelerated, including vegetables, meat, milk & eggs, coffee, tea, cocoa and non-alcoholic beverages.

It said prices also quickened a step for furnishing & household equipment, education and restaurants & hotels.

"Meanwhile, communication prices continued to decline and recreation, services & culture began to moderate," it noted.

Despite the cigarette price hike in September and potential petrol subsidy cuts in 4Q14, a lower average inflation of 2.9% is expected for the remaining months of September to December due to last year's high base. 

"BNM's 25bp hike of the overnight policy rate in July will help to contain inflation expectations and manage risk-taking behaviour. 

"In light of the recent softer data points, we think BNM may opt for a wait-and-see stance and keep rates unchanged at the MPC meeting. 

"While we believe that the central bank will continue to keep an eye on financial imbalance risks, the priority may have shifted towards safeguarding the stability of household consumption and domestic growth," it added.






Share:

Source From: http://www.thestar.com.my/Business/Investing/2014/09/18/Inflation-up-a-tick-at-in-Aug/

Other News & Articles


Is now a good time to upgrade? Things to consider when moving up the property ladder

You are not the only one planning to move up the property ladder. In the first half of 2018, upgrader buyers make up the second largest group in the primary market at 32%, compared with first-time buyers who account for 43%...

Posted on: 2018-12-05

Budget 2019 Highlights

This years budget carries the theme of Credible Malaysia, Dynamic Economy, Prosperous Rakyat. The budget will focus on three main thrusts with 12 key strategies to recapture Malaysia’s ‘Economic Tiger’ status...

Posted on: 2018-12-05

Being a landlord for the first time? Top tips for you to learn

To succeed in property investment with high rental yield, a landlord must learn the obligations and details of the renting process....

Posted on: 2018-11-27