Inflation in Malaysia expected to inch higher this year – UOB

After gaining 0.7% during 2019, consumer prices in Malaysia are seen gaining some traction during 2020, according to Senior Economist Julia Goh and Economist Loke Siew Ting at UOB Group.

Key Quotes

“Headline inflation inched up to 1.0% y/y in Dec (from 0.9% y/y in Nov), bringing 2019’s full-year inflation to an average of 0.7%. Dec’s inflation reading matched our and market expectations. The uptick in last month’s inflation was largely driven by higher prices of food, air passenger transport services, repair and maintenance of personal transport, pre-primary and primary education, as well as personal jewelleries amid steady fuel pump prices.”

“We keep to our view that inflation will continue to see a moderate uptrend as the year progresses, despite the government postponing its plan to float fuel pump prices. This is mainly premised on a planned upward adjustment in water tariffs nationwide, potential pass-through impact of a new mandated MYR1,200 minimum wage in 56 towns and cities, as well as rising global good prices amid normalisation from year-ago low base effects. We expect inflation to average higher at 2.5% in 2020 albeit with downside risks.”