TECHNICAL AND FUNDAMENTAL ANALYSIS

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Consumer Price Index (CPI) Vs Inflation Rate

March 24, 2019

Consumer Price Index (CPI)

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- Department of Statistics, Malaysia populates CPI: 120.80 points and Inflation: -0.4% for Feb 2019.

- With two months deflation (YoY) record, it sparks market concern on Malaysia economic outlook. Really? We need to drill into details..... Here we go...

- Malaysia CPI increases from 120.5 points (Jan'19) to 120.8 points (Feb'19) slightly (+0.25% ). 

- Thus, Malaysia CPI don't deteriorate based on month to month basis.

- Lower in CPI due to cost of transportation reduced significant which is leaded by cheaper oil price.

- Brent crude oil drop from USD86.74 per barrel to USD49.93 per barrel in 3 months (Oct'18 - Dec'19: -42.44%)

- Due to Fed interest hike + drop in oil price within short period, US shares market almost entered into a bear market. (Black Christmas Dec 25, 2018)

 

Inflation Rate

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- Calculation method of Inflation Rate 

Inflation Rate: -0.4% = (CPI Fed 2019: 120.8 - CPI Feb 2018: 121.3) / CPI Feb 2018: 121.3 * 100

- Details of CPI listing

 - From the CPI details, we noticed that Transportation cost is the major contributor which lead CPI recorded lower in Feb 2018+Feb 2019.

- As a conclusion, Malaysia deflation caused by lower oil price instead of internal economic growth issue.

- Furthermore, CPI and Inflation are lagging economic indicator. It is hard to reflect Malaysia economic growth in future.

 - Refer to Brent Crude Oil price recent movement, transportation cost will increase CPI and inflation accordingly. 

 

 

 

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