April CPI Reading Points To OPR Hold For 2025: Kenanga
Malaysia's headline inflation rate remained unchanged at 1.4% year-on-year in April, marking the lowest level in 50 months, according to Kenanga Investment Bank's Consumer Price Index (CPI) analysis of today's report released by DOSM. The figure was in line with both market consensus and house expectations.
Although annual inflation held steady, price pressures inched up month-on-month (MoM) by 0.15%, reversing a flat reading in March. The uptick was driven by increased costs in housing, miscellaneous goods and communication services. These gains were partially offset by a slight monthly decline in food prices, which slipped by 0.06% after rising 0.06% in the previous month.
Core inflation, which strips out volatile items such as food and fuel, rose modestly to 2.0% year-on-year (MoM: 0.23%), up from 1.9% in March. This suggests resilient underlying demand in the domestic economy despite the subdued headline figure.
Price Pressures Shift Beneath the Surface Housing costs rose slightly to 2.0% (March: 1.9%), underpinned by a notable rise in repair and security costs for dwellings, which surged 6.7%.
rose slightly to 2.0% (March: 1.9%), underpinned by a notable rise in repair and security costs for dwellings, which surged 6.7%. Miscellaneous goods and services posted a 4.1% increase (March: 3.6%), led by higher prices for jewellery and watches (up 19.6%).
posted a 4.1% increase (March: 3.6%), led by higher prices for jewellery and watches (up 19.6%). Communication deflation eased to -4.5% (March: -5.4%) as mobile service charges rose 2.4% MoM.
eased to -4.5% (March: -5.4%) as mobile service charges rose 2.4% MoM. Food and beverage inflation moderated to 2.3% (March: 2.5%)—a six-month low—largely due to the Aidilfitri 2025 Festive Season Maximum Price Control Scheme. Prices of fresh meat and fish dropped by 0.7% and 0.2%, respectively.
moderated to 2.3% (March: 2.5%)—a six-month low—largely due to the Aidilfitri 2025 Festive Season Maximum Price Control Scheme. Prices of fresh meat and fish dropped by 0.7% and 0.2%, respectively.
Global Inflation Trends Mixed
Inflation remained uneven across global markets: United States saw inflation ease to 2.3%, the lowest since early 2021. However, core inflation stayed high at 2.8%, leaving the Federal Reserve cautious despite growing speculation over rate cuts.
saw inflation ease to 2.3%, the lowest since early 2021. However, core inflation stayed high at 2.8%, leaving the Federal Reserve cautious despite growing speculation over rate cuts. United Kingdom experienced a spike to 3.5%, a 15-month high, due to Easter-related airfare and utility hikes—dampening expectations of a Bank of England rate cut in August.
experienced a spike to 3.5%, a 15-month high, due to Easter-related airfare and utility hikes—dampening expectations of a Bank of England rate cut in August. China remained in deflationary territory for the third month at -0.1%, although MoM prices rose slightly by 0.1% on stronger holiday spending. Demand concerns linger amid weak retail sales.
remained in deflationary territory for the third month at -0.1%, although MoM prices rose slightly by 0.1% on stronger holiday spending. Demand concerns linger amid weak retail sales.
Outlook: Inflation Seen at 2.7% in 2025
Kenanga maintains its 2025 inflation forecast at 2.7% (2024: 1.8%), with the outlook highly contingent on the government's July fuel subsidy rationalisation plan. Other key domestic drivers include a revised electricity tariff structure under RP4 and a potential hike in nationwide water tariffs.
While some market watchers expect a possible interest rate cut by Bank Negara Malaysia (BNM) in the fourth quarter of 2025, Kenanga sees the central bank holding steady. The Overnight Policy Rate has remained unchanged since mid-2023, and with inflation under control and growth stable, BNM is likely to maintain its current policy stance unless GDP growth slips below 3.5%.
'Delaying necessary reforms to avoid inflation spikes may hurt economic credibility in the long run,' the report concluded, highlighting the balancing act between price stability, fiscal discipline, and sustainable growth. Related
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BusinessToday
5 hours ago
- BusinessToday
Ringgit Decline Amid Middle East Tension, To Remain Rangebound
The local currency experienced a weakening trend this week, slipping past the 4.26 per US Dollar (USD) mark on Thursday. This decline was primarily driven by escalating tensions in the Middle East and growing speculation regarding potential US involvement in the conflict, dominating market sentiment. While the Ringgit held steady early in the week, the surge in geopolitical risk saw Brent crude oil prices climb to USD78.9 per barrel. Typically, higher oil prices tend to bolster the greenback. However, according to market analysts, persistent concerns over the US's fiscal health have tempered the USD's gains, preventing a stronger appreciation. This week, the US Dollar's performance was notably more responsive to geopolitical headlines than to macroeconomic indicators. Weaker-than-expected US retail sales figures, the Federal Reserve's increasingly 'stagflationary' guidance, and foreign selling of US Treasuries had limited impact on the greenback's movement, as investors prioritized safe-haven assets amidst global uncertainty. With a light data calendar expected, geopolitical developments are set to remain the central focus for currency markets. The USD is anticipated to outperform the Euro (EUR) in this risk-off environment. Remarks by President Donald Trump, suggesting a decision on US military participation could come within two weeks, further amplified market unease. While elevated oil prices have temporarily boosted the USD's safe-haven appeal, long-term structural fiscal concerns, particularly rising US debt, may exert downward pressure on the currency over the longer term. Analysts at Kenanga Research expect rising geopolitical tensions and ongoing tariff uncertainty to continue providing support for the USD, which will likely exert pressure on emerging market (EM) currencies, including the Ringgit. The Ringgit is projected to trade within the 4.24 – 4.27 per USD range, with its trajectory heavily dependent on the evolving situation in the Middle East. Markets will also closely monitor the Federal Reserve's June 25 board meeting, where discussions on potential easing of bank leverage rules could have broader capital implications. Technically, the USDMYR pair remains rangebound, orbiting its 5-day Exponential Moving Average (EMA) at 4.25. Price movement is expected to continue being primarily driven by geopolitical developments, with immediate support identified at 4.24 (S1) and resistance at 4.26 (R1). Related
The Star
2 days ago
- The Star
Oil prices settle lower at the weekend as US sanctions ease fears of escalation in Iran
JAKARTA/SINGAPORE (Reuters): Oil prices settled down on Friday night as the US imposed new Iran-related sanctions, marking a diplomatic approach that fed hopes of a negotiated agreement, a day after President Donald Trump said he might take two weeks to decide US nvolvement in the Israel-Iran conflict. Brent crude futures settled down $1.84, or 2.33%, to US$77.01 a barrel. U.S. West Texas Intermediate crude for July - which did not settle on Thursday as it was a U.S. holiday and expires on Friday - was down 21 cents, or 0.28%, at US$74.93. The more liquid August contract settled at $US73.84. Brent rose 3.6% on the week, while front-month US crude futures increased 2.7%. The Trump administration issued fresh Iran-related sanctions, including on two entities based in Hong Kong, and counter-terrorism-related sanctions, according to a notice posted to the U.S. Treasury Department website. The sanctions target at least 20 entities, five individuals and three vessels, according to Treasury's Office of Foreign Asset Control. "Those sanctions are cutting both ways. They may be part of a broader negotiation approach towards Iran. The fact they are undertaking this is a signal they are trying to resolve this outside of conflict," said John Kilduff, partner at Again Capital in New York. Oil prices jumped almost 3% on Thursday after Israel bombed nuclear targets in Iran, while Iran - OPEC's third-largest producer - fired missiles and drones at Israel. Neither side showed any sign of backing down in the week-old war. Brent prices retreated after the White House said Trump would decide whether the United States would get involved in the Israel-Iran conflict in the next two weeks. "Although a major escalation is yet to occur, risks to supply from the region remain high, still hinging upon the potential for US involvement,' said Russell Shor, senior market analyst at Israel's UN ambassador said Israel seeks genuine efforts on Iran's nuclear capabilities from Friday's meeting between European and Iranian ministers, not just another round of talks. "However, while Israel and Iran carry on pounding away at each other, there can always be an unintended action that escalates the conflict and touches upon oil infrastructure," PVM analyst John Evans said. Iran in the past has threatened to close the Strait of Hormuz, a vital route for Middle East oil exports. Oil exports so far have not been disrupted and there is no shortage of supply, said Giovanni Staunovo, an analyst at UBS. "The direction of oil prices from here will depend on whether there are supply disruptions," he said. An escalation of the conflict in such a way that Israel attacks export infrastructure or Iran disrupts shipping through the strait could lead to oil at $100 a barrel being a reality, said Panmure Liberum analyst Ashley Kelty. Elsewhere, the EU has abandoned its proposal to lower the price cap on Russian oil to $45, Bloomberg reported. U.S. energy firms this week cut the number of oil and natural gas rigs operating for an eighth week in a row for the first time since September 2023, energy services firm Baker Hughes said in its closely followed report. The oil and gas rig count, an early indicator of future output, fell by one to 554 in the week to June 20, the lowest since November 2021. (Reporting by Georgina McCartney in Houston, Seher Dareen in London, Sudarshan Varadhan and Florence Tan; editing by David Evans, Jason Neely, David Gregorio, Leslie Adler, Rod Nickel) - Reuters
New Straits Times
2 days ago
- New Straits Times
Trump threatens to fire Fed chair Powell, calls him 'numbskull'
WASHINGTON: US President Donald Trump escalated his criticism of Federal Reserve Chair Jerome Powell on Friday – publicly mulling whether to fire the official and appoint himself to the central bank. The Republican leader, who regularly berates Powell over the bank's decisions not to lower interest rates, took to Truth Social to smear the banker as a "numbskull," "moron" and "obvious Trump Hater." "I fully understand that my strong criticism of him makes it more difficult for him to do what he should be doing, lowering Rates, but I've tried it all different ways," said Trump, who appointed Powell during his first term. "I've been nice, I've been neutral, and I've been nasty, and nice and neutral didn't work!" Powell's term does not conclude until next year. He has said his dismissal would be unlawful, and that he has no intention of stepping down voluntary if Trump asks. "I don't know why the Board doesn't override this Total and Complete Moron!" Trump posted. "Maybe, just maybe, I'll have to change my mind about firing him? But regardless, his Term ends shortly!" Trump lashed out after the Fed held interest rates steady for a fourth consecutive meeting on Wednesday, forecasting higher inflation and cooler growth as Trump's tariffs take hold. The projections were its first since Trump unleashed sweeping 10 per cent tariffs on almost all trading partners in April.--AFP
