Published August 20, 2009

M'sia consumer prices fall again in July

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(SINGAPORE) Malaysia's consumer prices fell for a second straight month in July as commodity costs eased from last year's records, giving the central bank room to keep interest rates low to spur an economic recovery.

Consumer prices slid 2.4 per cent from a year earlier, after a 1.4 per cent decline in June, the Putrajaya-based statistics department said in a statement yesterday. That matches the median forecast in a Bloomberg News survey of 15 economists.

Consumer prices are falling in Asian economies including China, Singapore and Hong Kong, as the global recession reduces demand, causing oil and other raw material costs to ease from unprecedented highs in 2008. Easing inflation allowed policymakers worldwide to cut interest rates and increase public spending to stimulate their economies.

'Inflation should remain sufficiently subdued to allow Malaysia's central bank to hold interest rates steady through year-end,' said David Cohen, an economist with Action Economics in Singapore.

Bank Negara Malaysia has cut its benchmark interest rate by 1.5 percentage points since late November to 2 per cent to revive an economy that shrank 6.2 per cent in the first quarter. Policymakers will meet next Tuesday and release their rate decision the same day.

Consumer price gains may average between 1.5 per cent and 2 percent this year, central bank governor Zeti Akhtar Aziz said in May. -- Bloomberg