KUALA LUMPUR: The Consumer Price Index rose to a three-month high to 3.7 per cent in August compared to a year ago led by increases in transport.
The latest CPI number has prompted at least two research houses to revise their CPI outlook for 2017.
The Statistics Department said the index of transport group showed a significant increase of 11.7 per cent on a year-on-year basis in August.
During the month the average price of 1 litre of RON95 petrol was RM2.12 compared to RM1.75 in August last year.
As for RON97, the average price increased to RM2.39 in August 2017 compared to RM2.10 in August 2016.
Fuels and lubricants for personal transport equipment accounted for 7.8 per cent of the CPI weights.
In the case of the food and non-alcoholic beverages which accounted 30.2 per cent in the CPI weights, the 4.3 per cent increase was driven by food sub-group index which comprised of oils and fats (39.2 per cent), fish and seafood (8.1 per cent), fruits (3.2 per cent) and vegetables (2.9 per cent).
Among the index of food items which recorded notable increases in August 2017 compared to the same period of last year were cooking oil which topped the list (48.9 per cent), Indian Mackerel (13.6 per cent), cuttlefish (8.2 per cent) and Hardtail Scad.
UOB Bank economist Julia Goh said the main culprit for the August uptick is domestic oil prices which rose by 4.3 per cent to 7.8 per cent month-on-month.
“This translated to a 20.4 per cent year-on-year rise in the fuels and lubricants component and 11.7 per cent gain in the transport component. It added 0.5 per cent to overall CPI gains,” she said.
Alliance Bank said the latest number suggests that inflationary pressures in the transport sector may likely pick up again, reflecting higher pump prices in line with rising global crude oil prices.
In August, Brent crude oil prices averaged higher at US$51.9 per barrel, compared to US$49.1 per barrel in July, mainly due to lower crude oil production and growing concerns on recent hurricanes disasters in the US.
“Looking ahead, Brent crude oil prices will likely remain on an upward trend, mainly due to decreasing oil supplies by OPEC members coupled with growing global oil demand in 2017 and 2018, as projected by OPEC,”said the research house.
Alliance noted that the overall inflationary trend in Malaysia still remains high, as the three-month moving average is 3.5 per cent.
It has revised the full-year inflation target to 3.8 per cent in 2017.
According to the Statistics Department, six states recorded higher increases for food and non-alcoholic beverages index above the national level index for August 2017 compared with the corresponding month in 2016.
They are Johor (5.0 per cent), Melaka (4.9 per cent), Penang (4.8 per cent), Kuala Lumpur, Sabah and Labuan (4.8 per cent) and Kedah & Perlis (4.5 per cent).
Core inflation, which excludes most volatile items of fresh food, as well as administered prices of goods and services recorded changes ranging from 2.3 per cent to 2.6 per cent in the period January to August 2017 compared with the same period of the previous year.
UOB’s Goh said headline inflation has on average trended lower to 3.5 per cent year-on-year between July and August and inflation is expected to accelerate to about 4 per cent in Sept-Oct given a low base effect and higher Brent oil prices towards US$55-60 per barrel.
She revised up the inflation forecast to 3.9 per cent from 3.6 per cent previously, which sits on the upper end of Bank Negara Malaysia’s full year target of 3 to 4 per cent.