KUALA LUMPUR, March 29 — Moody’s Analytics expects Malaysia’s consumer price index (CPI) to come in at 3.0 per cent year-on-year (y-o-y) in 2021.
Senior Asia Pacific economist Katrina Ell said Malaysia’s headline CPI hit 0.1 per cent y-o-y in February, making it the first positive reading in almost a year.
“Higher oil prices will keep inflation rising in coming months, but some mitigation will come from the government’s pegging domestic oil prices under the recent stimulus package worth RM20 billion, 1.3 per cent of GDP (gross domestic product),” she said in an analysis titled “Macro Roundup: Is Inflation the Next Worry in Asia?” released last Friday.
She said inflation data released last week from Hong Kong, Singapore and Malaysia show inflation is modest in these economies, as that is the case in most of Asia.
“Inflation is subdued in most of Asia and expected to only gradually pick up over 2021 because of rising oil prices and economies starting to reopen.
“India and the Philippines are exceptions. In these economies, inflation is above comfort levels, adding to the list of challenges for policymakers,” she added.
Katrina said inflation in China is benign, despite the economy being relatively further ahead in its Covid-19 recovery path than others.
“China’s accelerating producer prices are not an automatic signal that consumer prices are headed for the same pickup,” she said.
Katrina said inflation is the next big concern in Asia, driven by rising oil prices and economies starting to reopen, helped by the global vaccine rollouts gathering pace.
“Low-base effects from the suppressed demand of 2020 are also a factor. We think the concern is premature, even though inflation is forecast to pick up over the year.
“Demand-side inflation pressures are expected to stay subdued across the region into the second half of 2021,” she said.
— Bernama
