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Malaysia March inflation at highest in 8 years, but below forecast

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Malaysia's consumer price inflation hit an eight-year high in March, but was slightly below the forecast in a Reuters poll and not expected to push the central bank to change its stance on monetary policy.

[KUALA LUMPUR] Malaysia's consumer price inflation hit an eight-year high in March, but was slightly below the forecast in a Reuters poll and not expected to push the central bank to change its stance on monetary policy.

Annual inflation was 5.1 per cent in March, the highest since touching 5.7 per cent in November 2008.

In February, annual inflation was 4.5 per cent. A Reuters poll forecast March inflation at 5.3 per cent.

Inflation in March was driven by a low-base effect and higher retail fuel prices compared to a year earlier, according to a statement by the Malaysian statistics department, which measures monthly inflation.

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The March inflation rate is notably higher than the historical average of 3 per cent, but it is unlikely to rattle Bank Negara Malaysia (BNM) as global oil prices are expected to remain stable this year, according to UOB economist Julia Goh.

"My take is that it's still cost-driven. Assuming oil prices remain fairly stable within the 50 to 55 dollar (per barrel) region, inflation will taper off in the second half," Ms Goh said.

Malaysia's central bank said last month that inflation will likely average between 3 and 4 per cent this year.

Bank Negara Malaysia said headline inflation will be"relatively high" in the first half of 2017 on higher fuel prices, but expects it to dip in the second half.

REUTERS

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