Thursday, March 21, 2013

February 2013 Consumer Prices: Here Comes The Pain Again

It looks like December 2012 will be the lowest point for inflation for some time, as February prices have continued where January’s increases have left off (log annual and monthly changes):


Headline inflation hit 1.5% in February, the first time that has happened since June last year. On the month, inflation increased at a 0.2% pace, a little higher than the median price increase over the past three years. All the increase and more came from sharply higher food prices (log annual and monthly changes):


…at least on an annual basis – monthly increases in food weren’t quite as dramatic. If you want to pin down the blame further it’s coming mainly from fish and seafood, with an assist from meats.

BNM is looking for average inflation to hit between 2%-3% this year, which suggests to me that we’ll probably need to see inflation in the region of 2.5%-3.5% by the end of the year. Part of it will come from firmer commodity prices (BNM assumption of Brent crude at USD110 and CPO prices averaging RM2.5k), but also from a presumed resumption in subsidy rationalisation.

Technical Notes:

February 2013 Consumer Price Index report from the Department of Statistics


  1. Will OPR of 3.00% be an appropriate level considering the inflation and growth
    outlook moving forward ?

    1. BNM thinks so. I'm wavering between thinking its alright, to thinking that it might be a little high. The signals are mixed.

  2. En Hisham,

    Why not travel back to 2008? That's where we got the "shot in the arm"!