• Inflation down 0.2% yoy; core inflation remains stable at 1.3%

• Food inflation increased at a faster pace

• Transport costs dropped amid lower global oil prices

• Global inflation inched down further

• Inflation rate to stay benign this year on Covid-19 shock on demand

Malaysia's inflation rate dropped by 0.2% yoy in March, after a 1.3% gain in February. This was the first decline in consumer prices since February 2019. Prices of durable goods increased 2.1% (Feb: +1.6%; Jan: +1.8%) whilst prices of nondurable goods declined 2.6% (Feb: +1.2%; Jan: +1.6%). Prices of semi-durable goods continued to decline by 0.6% yoy (Feb: -0.9%; Jan: -1.0%). On a monthly basis, consumer prices fell 1.2%, the first fall since January 2019.

The decrease in the overall index in March was driven by the plunge in transport prices (-8.8%) and a faster drop in cost of clothing (-1.3%). At the same time, prices slowed for both furnishing & routine maintenance (0.8%) and restaurants and hotels (0.9%). Meanwhile, costs of food & non-alcoholic beverages (FNAB) continued to increase in March by 1.2% yoy.

Meanwhile, CPI in 1Q20 increased 0.9% yoy while on a quarterly basis, the CPI decreased 0.2% qoq.

Source: BIMB Securities Research - 22 Apr 2020