KUALA LUMPUR, Malaysia--Inflation in Malaysia likely accelerated in March toward its highest level in eight years, according to a survey of economists this week.
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The consumer-price index, the country's main inflation gauge, is expected to have risen 5.5% in March from a year earlier--the highest since November when it accelerated 5.7%--according to the median forecast from a Wall Street Journal poll of 10 economists. Inflation in February was 4.5% compared with the same period a year ago.
"Elevated levels of food and fuel prices are the main factor for higher inflation rate," Mohd Afzanizam Abdul Rashid, chief economist at Bank Islam Malaysia Bhd, said. "While it remains high, we believe the second round effects via salaries and wages are very limited at this juncture."
He added that given that the Malaysian economy was operating somewhat below its potential level, incentives to pay for higher wages perhaps would be capped by lower risk appetite.
Malaysia Prime Minister Najib Razak said in February that the country's economy is expected to expand at a faster pace this year, after posting strong gross domestic product growth in the fourth quarter. Malaysia's GDP grew at a better-than-expected 4.5% in the three months ended December, lifting 2016's growth to 4.2%.
Malaysia's central bank last month said inflation is projected to trend higher at 3.0%-4.0% this year compared with 2.1% last year, mainly because of the pass-through impact of the increase in global oil prices on domestic retail fuel prices.
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Some economists have expected that Bank Negara Malaysia may raise interest rate this year in view of the strong inflation that translates into negative real returns, but Mr. Mohd Afzanizam believes the overnight policy rate will remain unchanged at 3.00% for the rest of the year as the economy has yet to reach its potential.
The official March inflation data is due Wednesday at 0400 GMT.
Write to Yantoultra Ngui at firstname.lastname@example.org
Malaysia's consumer-price index is expected to have risen 5.5% in March from a year earlier--the highest since November 2008. "Malaysia March Inflation Likely Accelerated to 5.5% on-Year -- Poll," at 0146 GMT, failed to mention the year in the second paragraph.
(END) Dow Jones Newswires
April 18, 2017 03:43 ET (07:43 GMT)