Malaysian consumer price index falls in April, further easing of monetary policy likely

Malaysian consumer price index fell 2.9 percent year-on-year in the month of April, its lowest point since the beginning of the current series in 2005. Sequentially, the headline inflation fell 2.7 percent month-on-month in April, owing to a 13.5 percent and 3.8 percent fall in the ‘Transport’ and ‘Housing and utilities’ components, respectively. Meanwhile, ‘food’ prices also slowed down by 0.2 percent sequentially in the month.

In line with lower global oil prices, the ‘Transport’ component constituted a -3.1 percentage point drag on the overall inflation headline. Similarly, the fall in ‘electricity and other fuel’ costs dragged inflation by -0.5 percentage point.

Meanwhile, core inflation remained stable at 1.3 percent year-on-year in April. Earlier this month, the BNM lowered its policy rate by 50 basis points to 2.50 percent at its meeting.

“Our read on the central bank’s latest statement is that the door to further easing, conventional and otherwise, remains open. Inflation is simply not an impediment”, said ANZ in a research report.