Malaysia's May inflation stays at 0.2% from year ago, just below forecast

[KUALA LUMPUR] Malaysia's annual inflation rate in May remained unchanged at 0.2 per cent for the third month in a row, government data showed on Wednesday.

Inflation has been mild since an unpopular consumption tax was scrapped in June 2018, while transport costs have declined amid a government effort to cap domestic fuel prices.

The median forecast in a Reuters poll was for the consumer price index to climb 0.3 per cent from a year earlier in May.

The index had risen 0.2 per cent year-on-year in March and April, following two months in deflationary territory.

Inflation in May was driven by higher prices for housing and utilities, food and beverages, restaurants and hotels, education, and furnishings.

Costs were down in all other sectors with the largest declines posted by transport and clothing, data from the Statistics Department showed.

Last month, the central bank cut its key interest rate for the first time since 2016, amid low inflation and concerns over slowing economic growth.

Bank Negara Malaysia, however, has said the country did not face serious deflationary pressures.

REUTERS