Malaysia inflation rate stabilises in Jan MALAYSIA'S inflation index stabilised in January despite the festive season and high oil prices earlier in the month. The Statistics Department said the Consumer Price Index (CPI) rose 2.3 per cent to 107.5 compared with 105.1 in January last year. This was within market expectations and a Business Times poll which expected a 2.42 per cent year-on-year increase. Compared to December 2006, the January CPI increased 0.4 per cent. Notable increases in comparison to January 2007 were alcoholic beverages and tobacco (nine per cent), restaurants and hotels (6.7 per cent) and food and non-alcoholic beverages (3.9 per cent). AmInvestment Bank economist Manokaran Mottain expects the inflation level to accelerate in the coming months, reflecting the high food bill amid rising oil prices and commodity globally. He expects inflation to inch upwards to 3.0-3.5 per cent in 2008. "Although the government is widely anticipated to keep pump prices at current levels in this quarter, we are of the view that the pressure on higher subsidy and widening fiscal deficit would force the government to announce hikes in fuel prices in the range of 10 per cent to 15 per cent in early April." He felt that the current inflation environment and outlook is still conducive for Bank Negara Malaysia to keep the benchmark overnight policy rate (OPR) at current levels of 3.50 per cent for the whole year. DBS Bank economist Irvin Seah expects the high oil prices during early January to translate into significant degree of imported inflationary pressure. "Inflation for the month would have been substantially higher if not for the continued appreciation in the ringgit, coupled with the high base last year due to hikes in toll charges," he said, adding that headline inflation could have been higher if toll charges were adjusted upwards again. Singapore-based HSBC Bank economist Prakriti Sofat feels the government should do away with the fuel subsidy, at least in part in the second quarter. http://www.btimes.com.my/Thursday/Nation/rup20cc.xml