Malaysia: Inflation expected to pick up pace later in 2021 – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting review the recently published inflation figures in the Malaysian economy.

Key Quotes

“Malaysia returned to positive inflation reading for the first time in 12 months at 0.1% y/y in Feb (Jan: -0.2% y/y). This came in close to ours (+0.3%) and Bloomberg consensus (+0.2%). The small positive uptick in Feb inflation was largely due to higher prices of fuel, selected food items, alcoholic beverages, and furnishing & household equipment amid the ongoing containment measures and electricity bill discounts during the month.”

“Although year-to-date inflation averaged -0.1% in the first two months of 2021 (Jan-Feb 2020: +1.5%), the full-year reading is expected to average higher at a positive rate of 3.0% (2020: - 1.1%). This comes as the economy is expected to recover further following the roll-out of vaccines and additional policy support, higher commodity prices, and year-ago low base effects. We project Brent oil prices to hover between USD60-70 /bbl this year (2020: average USD43.21).”