• Malaysia’s CPI moderated to 2.2% yoy in July
• The Producer Price Index (PPI) local production rose by 11.7% in July 2021
• The FBM KLCI rose by 4.75% or 72.13 points for the week to settle at 1,590.16 points
• US’s PCE price index rose by 4.2% yoy in July
• Singapore’s headline CPI increased 2.5% yoy in July 2021
• Fed chair tells Jackson Hole conference that slowing QE this year “could be appropriate”
• BOK raised the base rate by 25 basis points
• Week Ahead Economic Review

MALAYSIA ECONOMY

Malaysia’s CPI moderated to 2.2% yoy in July compared to 3.4% yoy in the previous month. This was the sixth straight month of inflation since February 2021. The moderation is within expectation, taking into account the fading base effect, presence of mobility restrictions and government subsidies. On a monthly basis, consumer prices contracted by 0.6% compared to a 0.1% gain in the previous month which marked the first monthly decline after seven straight months of increases.

Malaysia’s export growth moderated to 5.0% yoy in July from RM92.7bn in July 2020 to RM97.3bn. Exports sustained positive growth for the eleventh straight month but down from June print of 27.2% yoy, as reduced capacity order under national recovery plan (NRP) affected the export-oriented output. Malaysia export growth also moderated due to the fading low base effect, shifting demand to services, and supply chain disruptions amidst outbreak of the Delta variant in key trading partners.

The Producer Price Index (PPI) local production rose by 11.7% in July 2021, up from 11.5% rise in the previous month. The performance was the fifth month of the increase of inflation cost. The growth was driven by the rise in all sub-indexes: the mining index (57.7%); agriculture, forestry & fishing index (31.5%); manufacturing index (7.1%); water supply (1.6%). Electricity & gas supply rebounded by 0.2% compared to a 0.2% decline in June. Meanwhile, PPI by stage processing, the index of crude materials for further processing moderated from 39.5% to 35.8% in July 2021. The index of Intermediate materials, supplies & components increased by 10.5%. However, the finished goods recorded deflation of 0.4% in July, reversing a 0.3% rise in June. From January to July 2021, producer inflation rose by 11.7% compared to the same period a year ago.

Leading Index (LI) for June 2021 eased to +0.5% yoy, dropping faster from a 6.9% rise in May. The expansion in LI was mainly driven by real imports of other basic precious & other non-ferrous metals. However, the LI declined by 2.8% mom, extending the declining trend of a 2.9% drop in May. The Coincident Index (CI), which measures the overall current economic performance, fell deeper to 6.3% mom compared to a 1.3% drop in May. Likewise, the CI registered a negative growth of 3.0% yoy, a reversal of 10.0% growth in May.

Source: BIMB Securities Research - 30 Aug 2021