Malaysia's inflation rate to moderate in 2009: central bank

Malaysia's inflation rate, which spiked to a 26-year high in June of 7.7 percent, will moderate in the second half of 2009 as economic growth is likely to slow down, the central bank said Monday.
Bank Negara governor Zeti Akhtar Aziz said the recent high inflation rate was part of "first-round effects" caused by a 41-percent fuel price hike, which has also seen prices of goods and services increase.

"The moderation in growth ... will have some dampening effect on inflation and in the current environment we have seen commodity prices retracking," Zeti said according to the state news agency Bernama.

"As a result, this will also have less impact on domestic inflation," she said.

"What we have to monitor is the second-round effects, and with the moderation in growth, we expect that inflation will moderate next year, particularly in the second half of the year," Zeti said.

She said the bank would monitor for any increase in unemployment as growth slows.

Last week Second Finance Minister Nor Mohamed Yakcop said that the country's growth will likely moderate in the second half of 2008 as high crude oil prices affect exports, consumer spending and investment.

But he said the first quarter's strong 7.1 percent growth would cushion the moderation in growth.

He also said that inflation may peak in July or August, reflecting the rise in the cost of goods, after June's fuel price increase.

The government is set to present its 2009 Budget on August 29, where a revised growth forecast for the year will be announced.

The central bank said in May that it was still expecting growth of five to six percent in 2008, after expansion of 7.1 percent in the first quarter.

The economy grew 6.3 percent in 2007.

Sumber: MSN News