Thinner wallets?
Who’s keeping track with me? Here is March’s CPI. 4.8! That’s closer to 5% than it is to 4%!
And the CPI is expected to stay above 4% until 3Q.
I am glad I am outta there!
Thursday April 20, 2006
March inflation at 4.8%
PETALING JAYA: Malaysia's inflation rate accelerated by 4.8% in March from the same month last year after the Government reduced its subsidy for fuel prices.
The Government had reduced fuel subsidies, which resulted in prices rising as much as 23% at the end of February.
The consumer price index (CPI) of 4.8% in March was significantly higher than 3.2% in February, which was already felt by many as quite high.
An 18% jump in transport costs in March fuelled the higher CPI, according to a statement from the Statistics Department yesterday.
For the first three months this year, transport prices rose 12%, accounting for almost half the increase in the CPI during the quarter.
An 18% jump in transport costs in March fuelled the higher CPI.
Consumer prices climbed 3.7% in the first quarter from the equivalent quarter last year.
Prices of food and non-alcoholic beverages rose 3.5% in March from a year earlier. Food and beverage costs increased 3.9% in the first quarter, according to the department.
The rise in the March CPI had further widened the gap between fixed deposit rates of about just above 3%, which means there was a negative interest rate relative to inflation.
This could lead Bank Negara to raise interest rates to cool inflation and restore a positive level of deposit rates.
Bank Negara had raised its overnight policy rate by a quarter percentage point to 3.25% in February to curb inflation. That followed November’s rate increase, which was the first since the regional financial crisis of 1998. The central bank’s monetary policy committee next meets on April 25.
ECM Libra Securities Sdn Bhd economist Wong Chee Seng said the March inflation showed the biggest increase since the regional crisis period when the CPI jumped to more than 5% as a result of a sharply lower exchange rate in the ringgit against the US dollar.
“In other years, we're used to much lower inflation,” he added.
Wong expects a relatively high CPI will persist over the next few months. “There would be a ripple effect from a general rise in the prices of other goods, but that would not be very much,” he told StarBiz.
Hence, the CPI is likely to stay above 4% for several more months before peaking in July or August, he added.
His forecast for the CPI for the year as a whole is 3.2%, with inflation dropping back to about 2.5% in the second half of the year. He expects the inflation rate to taper off towards year's end as it would be compared with a higher base in the same period last year when the CPI started to rise.
