Malaysia’s inflation slows in July, remains below expectations

Malaysia’s consumer price index-led inflation slowed down for the fifth consecutive month in July, although it rose compared to a year earlier period. However, it remained below what market participants had earlier expected.

Malaysia’s consumer price index rose 1.1 per in July from a year earlier. The increase was below the 1.2 percent median forecast in a Reuters poll, and down from June’s 1.6 percent, data released by the Department of Statistics, Malaysia showed Wednesday.

Further, annual inflation reached a seven-year peak of 4.2 percent in February but has since moderated as fuel prices have remained low and as the effects of a goods and services tax imposed in April 2015 fade.

Moreover, figures from the Statistics Department showed higher prices for alcoholic and non-alcoholic beverages, tobacco, food and housing. Prices for transport, communication, clothing and footwear were lower than a year earlier.

Malaysia’s central bank last month cut its inflation projection for the year to 2-3 percent from 2.5-3.5 per cent. Meanwhile, Bank Negara Malaysia (BNM) also cut its key policy rate by 25 basis points to 3.0 percent, the first cut in seven years.