Malaysia's inflation eases to 1.8% in September, below expectations

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Malaysia's inflation eases to 1.8%

Highlights

Malaysia's consumer price index rose 1.8% year on year in September, below Bloomberg's median forecast of 1.9%, while core inflation remained at 1.7%.
Increases in housing, water, electricity, gas and fuel costs slowed to 1.4% year on year, driven by revisions to automatic fuel adjustment rates in Peninsular Malaysia.
Prices for the operation of personal transport equipment jumped 2.7% in September, up from 1.8% in August, although public transport inflation fell to 7.8%.

This article was translated from the original. Read the original version by our correspondent here.

September inflation details

As reported by The Edge Malaysia, citing the Department of Statistics Malaysia, the country's consumer price index rose 1.8% year on year in September, below the median forecast of 1.9% in a Bloomberg survey. On a monthly basis, consumer prices rose 0.1% in September, slowing from 0.3% in August, while core inflation, which excludes volatile items and administered prices, remained at 1.7% year on year.

The housing, water, electricity, gas and other fuels category, which accounts for 23% of the index basket, recorded a slower annual increase of 1.4%, compared with 2.1% in August. The slower rise in electricity, gas and fuel costs was due to revisions to the automatic fuel adjustment rates for domestic consumers in Peninsular Malaysia using more than 800 kilowatt-hours.

The food and beverages index, which represents around 30% of the index weighting, rose 1.8% in September as at-home food products showed moderation, while the food away from home subgroup continued to record growth.

Transportation sector pressures and other categories

Transportation inflation increased as higher vehicle operating costs outweighed slower price increases for public transport services. Prices for the operation of personal transport equipment rose 2.7%, accelerating from 1.8% in August, although public transport services inflation moderated to 7.8% from 10.5%.

In other categories, information and communication inflation eased to 1.8% from 2.6%. Inflation for personal care, social protection, and miscellaneous goods and services also slowed to 2.8% from 3.2%, indicating more moderate price pressures across several consumer segments.

In our previous article on BNM's monetary policy signals and market expectations, we explained how geopolitical risks in the Middle East and persistently high energy prices could affect the inflation trajectory and the direction of the OPR. We also discussed changes in BNM's guidance, which were seen as providing more room for rate adjustments, alongside market attention to ringgit movements and volatility in government bond yields.

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