RAY

The Malaysian Insider
21 May 2008
Inflation up 3pc in April, highest in 15 months  

KUALA LUMPUR, May 21 - Malaysia’s annual inflation jumped 3 percent in April led by dearer food prices, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad said today.

This is the highest level in 15 months but was expected by most economists. Shahrir released the figures ahead of an official announcement later today.

Inflation, measured by a basket of goods in the Consumer Price Index (CPI), also grew 2.7 percent for the January-April period from the same period last year. The food index, a component of the CPI, soared 5.7 percent in April 2008 from the same month in 2007.

The food index jumped 4.7 percent for the first four months of 2008 compared with the same period last year.

Shahrir said the government will unveil its plans to reform fuel subsidies by end 2008. The government estimates it will spend up to RM45 billion in subsidies for petrol and gas in 2008, an amount that will strain the budget and is three times more than revenue from personal income tax.

The government is also reviewing the palm oil cess, which helps subsidise local cooking oil and a bone of contention with palm oil producers. Malaysia is now the second bigger producer of palm oil in the world.

Shahrir disclosed that the government would prefer to provide subsidies for food rather than fuel.