KUALA LUMPUR, March 22 (Xinhua) -- Malaysia's inflation as measured by consumer price index (CPI) fell 0.4 percent year-on-year in February, official data showed on Friday.
This was the second month in a row in which prices fell. In January, the CPI dropped 0.7 percent year-on-year, the first negative growth since November 2009.
According to a statement from the Malaysian Statistics Department, the decrease of CPI in February was mainly due to the transport index which contributed 14.6 percent to overall CPI weight.
The decrease, however, was partly mitigated by the increase of housing, water, electricity, gas and other fuels that rose 2 percent year-on-year.
The food and non-alcoholic beverages which contributed 29.5 percent of CPI weights also increased 1 percent.
The CPI for the period of January to February declined by 0.5 percent as compared to the same period last year.
On a monthly basis, CPI increased 0.2 percent as compared to January.
Core index increased 0.3 percent in February as compared to the same month of the previous year.
As February CPI contracted for the second consecutive month, analysts believe that it further cements the case for a rate cut for Malaysia.
"The headline CPI figure did edge higher by 0.2 percent month-on-month, but even so, the underlying momentum does not suggest that inflation will become a constraint to policy easing," ANZ Research said in a note on Friday.
The research house, therefore, expects a single cut of 25 basis points in the overnight policy rate in May.