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By Stephanie Phang
April 23 (Bloomberg) -- Malaysia's
inflation accelerated to a 13-month high in March on rising food
and transport costs, making it harder for the central bank to cut
interest rates to spur economic growth.
Consumer prices increased
2.8 percent from a year earlier, after gaining 2.7 percent in
February, the Putrajaya-based
Department of Statistics said today. Economists were expecting a 3
percent rise. Prices were unchanged from February.
``I don't see the central
bank cutting rates,'' said Gundy Cahyadi, an economist at IDEAglobal
in Singapore. ``The domestic economy looks to be weaker this year
compared with last year, but with inflationary threats still rather
alarming, cutting rates could worsen the situation.''
Surging global commodity
prices have stoked inflation and threatened food security in Asia,
causing central banks to refrain from cuts in borrowing costs that may
help bolster growth as a U.S. slowdown threatens the region's exports.
The U.S. is Asia's biggest overseas market.
Bank Negara Malaysia has
kept its benchmark
interest rate unchanged at 3.5 percent since April 2006. The
central bank next meets to decide on the overnight policy rate on
April 29.
Southeast Asia's
third-largest economy is expected to grow 5 percent to 6 percent in
2008 after expanding 6.3 percent in 2007, Bank Negara said in its
annual report last month.
``Like the rest of the
world, Malaysia is experiencing inflationary pressure from food and
energy prices,'' said
David Cohen, director of Asian Economic Forecasting in Singapore.
``It is assumed that a slowing global economy will provide some relief
on those fronts during the second half of the year.''
Food, Tobacco
Price gains last month
were led by a 4.9 percent rise in food and beverages, the biggest
component in the index, and a 9 percent jump in alcohol and tobacco
costs from a year earlier.
Transport costs, the
third-biggest component in the consumer price index, rose 0.8 percent
in March from a year earlier, and housing and utility prices, the
second-largest contributor, gained 1.4 percent. Prices at restaurants
and hotels increased 7.1 percent, while the cost of recreation
services and culture added 2.7 percent.
Crude oil touched a
record $119.90 a barrel on April 22, and rice prices more than doubled
in the past year to reach a high of $24.745 per 100 pounds today.
Malaysia raised cigarette taxes in July and allowed six highway
operators to raise toll rates this year.
To contact the reporters
on this story:
Stephanie Phang in Kuala Lumpur at
sphang@bloomberg.net
Last Updated: April 23, 2008 05:18 EDT
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