Posted on 19 Aug 2009
Economists forecast 2.2%-2.6% contraction
Economists polled by Bloomberg forecast the CPI for July, which is scheduled for release today, to contract by 2.2% to 2.6% year-on-year.
According to the Statistics Department, the CPI fell into the negative level for the first time in more than a decade in June.
The high base effects from the fuel price hike starting from June last year had pushed the headline inflation number down to negative 1.4% in June 2009.
The index for food and non-alcoholic beverages in June showed a 3.4% increase, while that for non-food registered a 3.7% fall compared with a year ago.
TA Research economist Patricia Oh expects the CPI to turn positive by the fourth quarter following the recent upward revision in public transportation prices as well as expected fuel hike next month.
She forecast the overall CPI to be positive 1% and 1.8% in 2009 and 2010 respectively.
Meanwhile, RAM Holdings Bhd chief economist Dr Yeah Kim Leng noted that the current disinflation, where prices are coming off their high levels, would boost confidence and consumption, which in turn, would hasten economic recovery.
