Malaysia: Deflationary pressure seen losing traction – UOB

UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting give their opinion on the latest set of inflation figures in Malaysia.

Key Quotes

“Consumer price deflation narrowed for the second straight month to -1.3% y/y in July (from -1.9% y/y in Jun) as household consumption and domestic tourism activities continued to recover after the relaxation of Movement Control Order (MCO). This resulted in a -0.9% deflation in the first seven months of 2020 (vs. +0.3% y/y in Jan-Jul 2019).”

“We expect deflation to continue its easing trend over the next few months as the domestic economy recovers and commodity prices stabilise. Thus, we keep our 2020 full-year CPI projection at -0.5% (BNM forecast: -1.5% to +0.5%) with volatile global oil prices a wildcard. Underlying inflation is also projected to be kept in check and in line with a gradual improvement in domestic demand conditions amid still high unemployment.”