Malaysia inflation eases to 2.1%

But it will slowly rise in the coming months to average at around 2.7% for the full 2012 period, says OSK-DMG.

2012 inflation could still balloon from this moderate forecast -- 2011 posted full-year inflation of 3.2% -- due to the looming fuel subsidy cuts and civil servant pay hikes in the slated general elections.

Here's more from OSK-DMG:

There were no surprises in the Mar inflation data. Headline inflation continued to ease as expected, moderating from 2.2% in Feb to 2.1% yoy in Mar (OSK and consensus: 2.1%). In Mar, food prices (the largest component in the CPI basket at 30%) rose by 2.9% yoy, unchanged from Feb, while housing and transport cost (38% combined weightage) moderated a tad by 1.8% and 1.3% respectively from 1.9% and 1.4% in Feb. The rest of the components in the CPI basket also rose at a slower pace in Mar as compared to Feb, with furnishing and healthcare costs being the exception.

We think that inflation should moderate for the full-year on the back of base effects, coming in at 2.7% versus 3.2% in 2011. However, there are upside risks to our forecast, particularly from the impact from civil servant pay hikes, fuel subsidy cuts (probably coming after the general elections) and implementation of minimum wage. These could add 100-150 bps to our baseline forecast.
As for policy, we expect the easing inflationary trend to provide some room for the central bank to keep policy rates on hold for at least the first half of the year. We think that rate cuts are not likely unless the external environment worsens. However, given the build-up in inflationary pressure on the back of strong public spending and private consumption, as well as the possible further upside to inflation (as discussed above), the bias is tilted towards the normalization of rates. We think that a hike of at least 25 bps in the OPR sometime in the latter half of 2012 is possible.

The people you want to reach are already in this room.

Every quarter, SBR lands on the desks of the founders, CFOs, and directors running Asia's most consequential companies. Every day, they open our newsletter and read our website. It's a room that took twenty years to build — and it's the one most of our partners are trying to get into.

The good news is that the door is open. We work with companies on thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. The shape of the right partnership depends on what you're trying to do, which is why we'd rather start with a conversation than send a rate card.

If you have something this room should know about, tell us. We'll tell you honestly whether we can help, and how.

No rate cards until we understand the brief. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia