Friday, May 23, 2008

April inflation at 14-month high

Thursday May 22, 2008

April inflation at 14-month high

KUALA LUMPUR: Malaysia's inflation rate jumped to a 14-month high in April on rising food costs, adding pressure on the Government to rein in prices.

Consumer prices rose 3% from a year earlier, after a 2.8% gain in March, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad told reporters yesterday. The Government might consider imposing a windfall tax to curb inflation, Shahrir said without giving specific details.

“Inflation is increasingly becoming a problem worldwide,” said David Cohen, director of Asian economic forecasting at Action Economics in Singapore. “Malaysia will not be immune.”

Surging food and fuel prices have hurt consumers in Asia, where about 600 million people survive on less than US$1 a day. The Malaysian Government this month eased import restrictions on steel and capped the price of more types of rice to contain inflation.

Still, “risks to inflation remain on the upside,”said Kit Wei Zheng, an economist at Citigroup Inc in Singapore. The Government might raise diesel prices, and food inflation would stay “elevated,” he said.

Price gains last month were led by a 5.7% rise in food and beverages, the biggest component in the index, and a 9% jump in alcohol and tobacco costs from a year earlier.

“Food inflation likely accelerated further on global shortage in rice stock and the subsequent increase in rice prices,” said Kit at Citigroup. “Higher transport inflation will also persist, largely due to the lingering effects of the increase in toll charges on six highways.” – Bloomberg