• December inflation fell 1.2% yoy but increase 0.5% mom

• Malaysia recorded 1.2% drop in CPI over 2020

• Core inflation remained at 0.7% yoy in December

• Global inflation accelerated

• Inflation to be higher in 2021

Malaysia’s inflation dropped 1.4% yoy in December after declining 1.7% yoy in the previous month. The latest CPI reading marked the 10th consecutive month of deflation but the softest pace since September, amid ongoing COVID-19 disruption. The declined in the CPI was weighed mostly by fuel and utilities prices amid lower crude oil prices and the government's electricity subsidies to alleviate the economic impact of COVID-19. Although year-on-year CPI decreased, on a monthly basis, consumer prices were up 0.5% in December, the most since July, after a 0.2% fall in November.

Non-food price index decreased for the tenth consecutive month by -3.2% yoy (Nov: -3.2%), while food price index increased by +1.4% yoy (Nov: +1.4%). CPI without fuel, which covers all goods and services except RON95, RON97 and Diesel, fell 0.1% in December (Nov: -0.1%; Oct: +0.1%). Meanwhile, increased in durable goods price was slightly slower at 2.3% yoy (Nov: +2.4%), while prices of semi- and non-durable goods continued to decline by -0.3% yoy and -5.0% yoy respectively (Nov: -0.7% and -4.9%).

Source: BIMB Securities Research - 22 Jan 2021