Food prices push September inflation rate up

By Lee Wei Lian, The Malaysian Insider

KUALA LUMPUR, Oct 24 — Food prices in September jumped five per cent from the same period last year, driving the Consumer Price Index (CPI) to increase at a faster rate of 3.4 per cent compared with 3.3 per cent in August.

The slight increase in inflation rate comes as the Najib administration struggles with the need to balance growth with accommodative interest rates while at the same time helping keep a lid on the cost of living.

Figures released by the Statistics Department show that the index for Food and Non-Alcoholic Beverages and Non-Food for the month of September showed increases of 5.0 and 2.7 per cent respectively compared with the same month in 2010.

RHB Research Institute said however that inflation will likely moderate but stay elevated at around 2.8 per cent in 2012 compared with 3.3 per cent estimated for 2011.

“This is on account of a reduction in subsidies for fuel and power tariffs as well as industrial gas once every six months by the government that will lead to higher input costs and part of it will likely be passed on to consumers,” said RHB.

Inflation has been surging globally largely due to massive amounts of liquidity that have been released by governments to prop up economic growth following the 2008 financial crisis.