KUALA LUMPUR (May 13): Bank Negara Malaysia (BNM) said today Malaysia’s average headline inflation in 2020 is likely to turn negative, due mainly to projections of substantially lower global crude oil prices. 

In a statement today, BNM said that going forward, the outlook of the country’s headline inflation remains significantly affected by global oil and other commodity prices including food, as well as evolving demand conditions. 

"Underlying inflation is expected to be subdued amid projections of weaker domestic growth prospects and labour market conditions,” BNM said.

BNM’s statement today is in conjunction with the announcement on Malaysia’s first quarter 2020 (1Q20) economic growth numbers. BNM said Malaysia's economic growth, as measured by gross domestic product (GDP), moderated sharply to 0.7% in 1Q20 due to the impact of measures taken both globally and domestically to contain the spread of the Covid-19 pandemic.

"During the quarter (1Q20), headline inflation remained modest at 0.9%, mainly reflecting the lapse in the remaining impact from Sales and Services Tax (SST) implementation and lower price-volatile inflation. Core inflation moderated slightly to 1.3%,” BNM said.