Malaysia inflation likely to fall in Dec

KUALA LUMPUR: Consumer Price Index, the official barometer of inflation, is likely to show a lower reading in December, an indication of lower inflationary pressures, said economists.


A Business Times poll expects the CPI to record an average reading of 3.09 per cent year-on-year for December.

The Statistics Department will release the details today.

Gundy Cahyadi of OCBC Bank thinks inflation has peaked in Malaysia and the December number should reflect this moderation.

"Prices are relatively lower compared with the earlier half of the year, and thus, the annual inflation figure is likely to be lower too."

He said signs of slowdown in domestic demand mean that pressures from the demand side have generally subsided as well.

Citibank, however, said compared with November, the CPI is likely to have risen by 0.2 per cent.

It said the softening external outlook has reduced demand-pull inflation pressures, though not eliminated them completely.

"We think food prices will remain sticky given lingering supply disruption from Thailand, though these could be kept in check by government food price controls and subsidies," it added.

Economists polled expect the CPI to moderate to below 3.0 per cent in 2012. Standard Chartered Bank expects inflation to be less of a concern in 2012.

If the government maintains subsidies as expected (especially for fuel), this should reduce inflationary pressure, giving Bank Negara Malaysia more policy flexibility, it said.