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Malaysia's January inflation edged up to 1.3%

Flickr photo by ET

Consumer prices increased 0.4%.

According to BofA Merrill Lynch Global Research report, headline inflation came in at +1.3% in Jan, up slightly from +1.2% in Dec. On a month-on-month basis, consumer prices rose +0.4% in Jan from Dec. 

The pick-up in inflation was led by food & beverages (+1.1% mom), education (+1%), and household equipment & furnishings (+0.5%). Communication (-0.2% mom) was the only component registering a decline.

The inflation print will probably inch higher in Feb due to Chinese New Year festivities, when prices of food, beverages and restaurants typically rise.

Here's more from BofAML:

This will be aggravated by a lower base in Feb last year, as the Chinese New Year holidays took place in January last year. For the full year 2013, we expect inflation to average at a higher +2.3% (vs. +1.7% in 2012).

While the incumbent government has hinted of more cash handouts if they remain in power post the 13th general elections, fuel subsidies may have to be cut as the government tries to rein in spending and curb its growing debt.

The Malaysia Employers Federation (MEF) said last month that the blanket implementation of the minimum wage law will result in some pass through to food prices.  

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