Why is rate of inflation accelerating? For example, just looking at the Brent crude oil price and retail pump prices in the second quarter of of 2020 and this year, prices of Brent crude have almost doubled while RON95 presently retails at RM2.05 per litre, although capped, is almost 50% higher than a year ago.
THE Malaysia Consumer Price Index (CPI) for the month of March was a surprise as the headline 1.7% reading was ahead of market forecast of 1.6% jump.
As we are now into the 2Q period, it is likely that inflation reading will be elevated as Bank Negara Malaysia (BNM) itself has highlighted this fact.
Personal Income and Spending
Personal Income and Spending provide markets with a more more comprehensive view of their specific categories than older versions of the same information.
Personal Income includes wages and salaries, interest, dividends, rent, workers compensation, proprietors earnings and government transfer payments. That is much longer list, and a more accurate representation of household finances than the Average Hourly Earnings statistic of the payroll report.
Yet from a market perspective the difference is in degree and not in kind. Personal Income does not provide different information nor does it stray from the direction of wages. Its additional accounting may make consumer spending more understandable even in weak labor markets but for most people their income is still largely wages.