Malaysian Inflation Rate Eases to Slowest in Almost Three Years

Malaysia’s inflation eased in December to the slowest pace in almost three years, providing scope for the central bank to support growth.

Consumer prices rose 1.2 percent from a year earlier, after climbing a previously reported 1.3 percent in November, according to data released by the Putrajaya-based Statistics Department today. The median of 15 estimates in a Bloomberg News survey was for a 1.4 percent gain. Inflation was 1.6 percent in 2012, the report showed.

Malaysia’s central bank has kept interest rates unchanged for nine straight meetings as an expanding economy and inflation below 2 percent reduced the need to adjust monetary policy. Bank Negara Malaysia said in November price gains are expected to remain “modest” in 2013 amid excess capacity in the economy.

“Inflation is going to be higher this year but I don’t think it will be out of control,” Ho Woei Chen, a Singapore- based economist at United Overseas Bank Ltd., said before the report. “Bank Negara is still in a comfortable position. I don’t think they will either hike or cut interest rate this year.”

Policy makers meet next week and are forecast to keep the benchmark rate at 3 percent, according to economists surveyed by Bloomberg. The economy may expand 5.6 percent this year after growing an estimated 5.1 percent in 2012, the Malaysian Institute of Economic Research said Jan. 17.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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