Ask any citizen of any nation which published economic statistic they find most deceiving, and the answer will generally be income per capita and the consumer price index would probably come in a close second.
Regardless, the Department of Statistics recently published number of 2.9% year-on-year CPI increase in February (January 2011: 2.1%) might actually be a sign that maybe the statistic is starting to reflect prices on the ground.
- Food prices (4.7%) seem to be the major culprit, with the price of vegetables being reported as having increased by an unseasonal 14.2% from the previous year, which indicates its not wholly a Chinese New Year thing but more likely a problem on the supply side of the equation. On a month-on-month basis however, meat takes responsibility for much of the increase.
- Unless you have been living under a rock for the past few months, the mounting geopolitical tensions in the Middle East are causing energy prices to escalate. This had increased the price of imports and more importantly, production costs for various goods.
- Bank Negara in its just-published annual report had noted some incipient signs of improving domestic demand which has already begun to filter into overall prices (well, someone's got to be buying those really nice houses)
- What is surprising (to me, anyway) is the increase in food prices in restaurants (5.4% y-o-y), which outstrips the increase in regular food prices and is probably indicative of extraction of producer surplus during the celebratory season.
- To explain why it's so surprising is that food in restaurants have an added premium component and to see its prices accelerate faster than regular food prices does say something.