Malaysia Inflation yo

Inflation ebbs in July from June

Latest reading: Consumer prices increased 1.8% on a year-on-year basis in July, following a 1.9% increase in the prior month. Relative to the previous month's figures, price pressures reduced for transportation in July (+1.4% on a year-on-year basis vs +2.8% in June). This reflected lower unsubsidized retail fuel prices and an expansion of the diesel subsidy scheme; from 1 July, the government widened diesel subsidies to all Malaysians nationwide and cut the subsidized diesel price. In contrast, there were more notable price pressures for food and non-alcoholic beverages (+1.8% vs +1.4% in June), housing and utilities (+1.8% vs +1.4% in June) and recreation services and culture (+1.2% vs +1.1% in June). Finally, consumer prices were unchanged in July in month-on-month terms, following a flat reading in the previous month.

Panelist insight: Nomura’s Euben Paracuelles and Yiru Chen commented: “Our forecast pencils in an upward trajectory [in inflation] in H2 […], consistent with our view of robust domestic demand and labour market conditions holding up. Gold prices are resurging, while a possible super El Niño, resulting in crop yields declining, may pose further upside risks to food prices.”

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