Drop in Inflation Rate of Malaysia

The Annual inflation rate of Malaysia declined to 1.3 percent in June from 1.8 percent the month earlier due to the withdrawal of a goods and services tax based on the poll by Reuters.

A survey of ten analysts by Reuters forecast for June ranged from 0.6 percent to 1.9 percent. The central bank of Malaysia kept the interest rates at 3.25 percent at a policy meeting on July 11 despite sluggish inflation and steady growth.

The new government by Prime Minister Mahathir Mohamad starting May 9 general election abolished the consumption tax of 6 percent on June 1, which was implemented for three years.

According to economists, the elimination of goods and services tax affect the inflation and pushed it lower in June,  despite the higher cost of transportation and food during the month of fasting in Ramadan and subsequent Eid al-Fitr celebrations.