Inflation hits 27-year high of 8.5pc in July

Inflation hits 27-year high of 8.5pc in July

KUALA LUMPUR, Aug 22 — The annual inflation soared to 8.5 per cent in July, sharply up from 7.7 per cent in June.

The July data was the steepest rise since 8.5 per cent in December 1981 and the government also today announced that the price of petrol will be cut to RM2.50 per litre from RM2.70 effective tomorrow, a move which will dampen inflation.

It was unpopular petrol price hikes in June and electricity price rises in July that catapulted inflation from 3.8 per cent in May.

The cuts in fuel prices were brought forward from Sept 1.

Despite the surge in inflation, Bank Negara, alone in Southeast Asia, has kept interest rates unchanged for over two years at 3.5 per cent.

Bank Negara governor Tan Sri Zeti Akhtar Aziz has said slower economic growth and weakening commodity prices would help reduce price pressures ahead, especially next year.

It meets again on Monday to decide on rates after it surprised markets in July by leaving rates unchanged.