Monday, March 22, 2010

Feb 2010 CPI: Still Running Below Trend

One would generally expect increases in the price level to slow after major festivals. Last week’s February 2010 inflation report shows that this year has so far been no exception:



Month on month, growth was completely flat. Given that CPI growth has been below the medium term trend for pretty much the past year, there’s still very little price pressure in the economy yet.

The core measure shows even less price pressure:



If BNM does raise the OPR at the next MPC meeting in May, it won’t be because of incipient inflation. The IMF thinks that BNM was being too accommodative even last year, so setting higher interest rates won’t necessarily be a tightening move – more a case of getting back to neutral.

Technical Notes

February 2010 CPI report from Department of Statistics

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