CPI expected to turn positive in Dec

 

MALAYSIA'S Consumer Price Index (CPI) will still be negative in October and November this year, before turning positive in December, say economists.

Economists polled by the Business Times expect the October CPI to see a year-on-year drop of 1.47 per cent from -2.0 per cent.

Inflation turned negative in June, with prices down 1.4 per cent from a year ago - the first time since August 1986 - and again in July and August, down 2.4 per cent.

Standard Chartered Bank said the pace of price decline should ease below 2 per cent in October as the negative base effect from transport costs unwinds in the next few months.

The Statistics Department will release the details today.

Citi said the CPI will stay in a technical deflation for the fifth consecutive month, although the decline in prices most likely has bottomed in August, as base effects from the over 40 per cent fuel price hike in June last year.

It expects inflation to turn slightly positive further into the fourth quarter, for a full year 2009 inflation of 0.6 per cent.

TA Research economist, Patricia Oh, expects all price levels to remain in check during October except for the rise in the index of tobacco and alcoholic beverages.

The main index may continue to indicate a slight increase on a month-on-month basis, following the hike in excise duty of tobacco by 5.6 per cent as announced in late September.

Kit said the moderation of the in decline in October is likely to be led by food and tobacco prices, as commodity prices climb and the hike in excise duty on tobacco is channelled onto consumers.

"Transport prices may also increase slightly less because of the effect of the shift to a two-tiered petrol pricing system, but because of the removal of up to 20 per cent concession on off-peak toll charges in PLUS expressways," he added.

The Finance Ministry has projected inflation for Malaysia to turn to 1 per cent from the current negative level this year.