Malaysia Dec Inflation at 3.5%, in Line With Expectations

KUALA LUMPUR, Malaysia--Malaysia's inflation accelerated at an expected pace in December, mainly due to higher transports costs.

The consumer-price index in December rose 3.5% from a year earlier, the Department of Statistics said Wednesday, compared with a 3.4% increase in November. The figure was the same as the 3.5% rise tipped by a Wall Street Journal poll of nine economists.

Compared with the month before, the CPI climbed 0.1% after seasonal adjustment, the data showed.

Core inflation rose 2.2% in December compared with the same month last year.

December's inflation was mainly driven by higher year-over-year costs for transportation, food and non-alcoholic beverages, according to the statistics department.

Malaysia's central bank is due to announce its overnight policy rate decision on Thursday. The majority of the economists polled by The Wall Street Journal expect Bank Negara Malaysia will raise its benchmark interest rate to 3.25% from 3.00%, as the country's economic growth and inflation are expected to remain elevated.

The bank appeared hawkish and signaled the possibility of rate increase for 2018 in its policy statement released in November, after it left the key benchmark interest rate unchanged at 3.00%. Economic growth in the Southeast Asian nation grew at a faster-than-expected pace in the first three quarters of this year, driven by robust domestic demand and a positive external sector.

Malaysia's gross domestic product grew 6.2% on-year in the third quarter ended September, the fastest pace in over three years.

Bank Negara Malaysia Governor Muhammad Ibrahim had said that inflation is expected to likely to stay in the upper end of the official forecast of 3%-4% for 2017.

-- Write to Yantoultra Ngui at yantoultra.ngui@wsj.com

(END) Dow Jones Newswires

January 23, 2018 23:15 ET (04:15 GMT)