Inflation moderated further in June

• June inflation rose by 3.4% yoy and 0.1% mom

• Core inflation increased by 0.7% yoy

• Signs of moderation in global inflation rates

• Headline inflation to moderate as demand-side pressure expected to remain weak

Malaysia’s CPI registered a smaller gained of by 3.4% yoy in June compared to 4.4% yoy in the previous month. June’s headline inflation slowed further to record a modest rate within the BNM inflation target of 2.5%-4.0% for 2021. The moderation is within expectation taking into account the fading base effect and the impact of a nationwide lockdown on demand for selected food and non-essential goods and services and also slower rise in the transport CPI. On a monthly basis, consumer prices increased 0.1% compared to 0.0% in the previous month.

The increased in non-food price index moderated to 2.7% yoy (May: +5.9%; Apr: +6.1%) while food price index slowed to +1.3% yoy (May: +1.5%; Apr: +1.9%). CPI without fuel, which covers all goods and services except RON95, RON97 and Diesel, increased 1.5% in June (May: +1.6%; Apr: +1.7%). Meanwhile, increased in durable goods price was sustained at 1.1% yoy (May: +1.1%; Apr: +1.3%). The prices of semi durable goods declined by -0.3% yoy (May: -0.4%; Apr: -0.3%), while non-durable goods rose by 7.9% yoy (May: +10.8%; Apr: +11.4%).

Meanwhile, CPI in 2Q21 increased 4.1% yoy while on a quarterly basis, the CPI increased 0.5% qoq. The CPI for the period of January to June 2021 increased 2.2% as compared to the same period last year.

Source: BIMB Securities Research - 26 Jul 2021