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Malaysia's August inflation growth falls to 42-month low
Last Updated: 2018-09-19 15:59 | Xinhua
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Malaysia's consumer price index (CPI) rose 0.2 percent year-on-year in August, the lowest rate in 42 months, due to the sharp fall of fuel prices, according to official data released Wednesday.

The fuel prices have caused the index for transport to increase 2.1 percent as compared to 6.7 percent recorded in July, Malaysian statistics department said in a statement,

Meanwhile, the overall index for food and non-alcoholic beverages which accounted for 29.5 percent in the CPI of weights, increased 0.4 percent in August.

The month also saw increases of prices in housing, water, electricity, gas and other fuels of two percent, education of 1.1 percent, restaurants and hotels of 0.7 percent, and food and non-alcoholic beverages of 0.4 percent.

On a monthly basis, CPI increased 0.2 percent as compared to July.

CPI for January-August registered an increase of 1.3 percent as compared to the same period last year.

Meanwhile, core inflation decreased 0.2 percent in August, the same rate as in the previous month.

ANZ Research said in a note Wednesday that the decline of CPI was driven by the effects of the Goods and Services Tax (GST) removal from June, and favourable base effects, especially in the transport component.

The research house expects the September CPI inflation print to show an increase as the reintroduction of Sales and Service Tax will see some price increases.

"The extent of the increase will depend on how quickly manufacturers and service providers can implement the changes and how much of the tax is passed on to consumers," it said.

The research house sees inflation remaining benign through the rest of 2018 and well below 2 percent through the first half of 2019.

Given that the low inflation is transitory due to GST removal and base effects, it also expects Malaysia's central bank to keep the Overnight Policy Rate (OPR) unchanged at 3.25 percent for a while.

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