Amidst alleged public complain about the new government u-turning on promises and insufficient notable changes to livelihood, Malaysian economy was reported to enter deflation in January for the first time in almost a decade since November 2009.
While it was not really notable, consumer prices were reported by Bloomberg to have declined by 0.7 percent from a year ago. According to the Department of Statistics Malaysia, they released an info-graphic that listed down items that have increase or decrease in Consumer Price Index (CPI).
Based on the percentage change by main groups, transport CPI for January had a drop of 7.8 percent drop compared to previous comparison of December 2018 with December 2017 at 2% in which MalayMail reported UOB Global Economics and Markets Research to say that it is due to petrol prices that were 8 percent to 10 percent lower.
Followed by clothing and footwear which saw a 3.3 percent drop from January 2019, miscellaneous goods and services remained at a 2.4% drop similar to December 2018 with December 2017, communication 1.2% drop January 2019 with January 2018 compared to 1.3% in December 2018 with December 2017.
The cost of food and non-alcoholic drinks rose 1 percent in January 2019 due to 8.4 percent surge in the price of eggs and a 5.3 percent surge for chicken.
Bloomberg had reported that the Malaysian government had started an investigation into collusion or cartels artificially boosting the price of eggs. Minister of Domestic Trade and Consumer Affairs Datuk Seri Saifuddin Nasution bin Ismail was reported to say that if the price remains high or continue to rise, Malaysia consumers will be adversely affected. He also added that eggs are also exported to other countries.
“If egg prices continue to increase or remain high, we might examine whether it’s necessary to continue exporting eggs at the current volume,” he was reported by Bloomberg to have said.
Although UOB Global Economics and Markets Research has expected the drop in CPI to be temporary and estimated headline inflation to rise 2 per cent this year from 1 per cent last year.
“We expect headline inflation to revert back up once the high base effect in the transport component recedes and oil prices continue to rise,” the MalayMail reported UOB Malaysia senior economist Julia Goh has said in a statement.
“As such, we maintain our inflation forecast of 2.0 per cent for 2019, on the back of a sustained recovery in oil prices, stable broadband prices, potential weather disruptions, and resilient domestic demand. The government has indicated that despite floating petrol prices, levels will be capped in order to manage cost pressures.”
by Bob Tan