Friday, January 23, 2015

Dec 2014 Consumer Prices

With the (slight) fall in petrol prices, the aggregate price level moved a little lower in December (log annual and monthly changes):


Petrol at the pump fell from RM2.30 to RM2.26 effective December 1. That was enough to offset a late jump in food prices from the flooding episodes at the end of the year (log annual and monthly changes):


As a result, on a month on month basis the Pain index fell 0.2%, the biggest drop in since February 2012. Core prices on the other hand stayed stagnant.

For January, the drop in petrol prices was much sharper, falling 35 sen to RM1.91, so expect to see headline inflation dropping to even lower, though still positive, territory.

Moving on to state level indices, Kelantan is still the champ (+0.3% on the month), while Selangor and KL registered negative price growth (-0.3% and -0.2% respectively). That tells you how much petrol subsidies mattered to the richest states in Malaysia. We got rid of them not before time.

One other thing with the float in fuel prices – this is going to make forecasting Malaysian inflation really hard going forward. But that’s a small price to pay for the abolition of fuel subsidies, and a better functioning market.

Technical Notes:

December 2014 Consumer Price Index report from the Department of Statistics

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