Malaysia: Inflation expected to pick up pace in 2021 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the recent publication of the CPI in the Malaysian economy.

Key Quotes

24-hour view: “Headline consumer price index (CPI) decline narrowed to 0.2% y/y in Jan (from -1.4% y/y in Dec 2020), coming in lower than our estimate (-1.0%) and Bloomberg consensus (-0.8%). This was largely due to higher fuel prices, a further uptick in selected food items, and the effect of lower electricity discounts and rebates amid the reinstatement of Movement Control Order (MCO 2.0) in mid-Jan.”

“This affirms our view of a return to positive headline CPI in 1Q21. The uptrend in CPI this year will be driven by projected economic recovery amid the roll-out of vaccines that starts today (24 Feb), higher global commodity prices, and year-ago low base effects. We are likely to tweak our 2021 full-year inflation target of +2.1% higher amid signs of higher global oil prices (official forecast: +2.5%; 2020: -1.1%).”