MALAYSIA’S inflation outlook remains weak and in the deflationary region as the headline rate is likely to hover between -0.6% and -1.5%, said AmBank Research today.
Negative inflation has moved into its third consecutive month in May, despite global crude oil prices having begun to stabilise.
AmBank chief economist and head of research Anthony Dass said the average inflation for the first five months slid by 0.6% year-on-year (y-o-y).
He added that core inflation, which excludes fresh food and administered prices of goods and services, grew at a slower pace by 1.1% y-o-y from 1.3% y-o-y in April, bringing the first five months average to 1.3%.
He said transportation cost fell for the third month in a row by 20.8% y-o-y in May, while food and non-alcoholic beverage prices rose at the same pace as in April by 1.2% y-o-y despite the Hari Raya festive season.
“Traditionally, prices should increase in view of the festive season. However, this time around due to the implementation of the movement control order (MCO) and conditional MCO, it has impacted consumer spending,” the note said.
The weak economic outlook is reflected by April’s Leading index (LI) that fell further by 5.5% y-o-y from -3.6% y-o-y in March.
It is the lowest since February 2009 and largely impacted by the MCO that disrupted supply and demand.
The labour market also remains languid, with unemployment at 5% in April. – June 25, 2020
