KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Indonesia's consumer prices have risen at their slowest rate in nearly three years, prompting speculation that the central bank may consider further easing measures this month. This decline is attributed to falling food and fuel costs, along with concerns about weak consumer demand.
According to the statistics office, inflation rose 1.84% in September compared to a year earlier, marking the lowest headline figure since November 2021 and falling short of the median forecast of 2% from a Bloomberg survey of economists.
Deflationary Trends and Supply-Side Influences
On a monthly basis, the consumer price index decreased by 0.12%, extending Indonesia’s streak of monthly deflation since May—the longest such period since 1999, as reported by the statistics agency.
The monthly deflation is primarily driven by supply-side factors, as the harvest season has led to an abundance of commodities such as chili and tomatoes. Additionally, prices of non-subsidized fuels, poultry, and school fees are also on the decline, noted Amalia Adininggar Widyasanti, acting head of the statistics office.
Concerns About Consumer Demand
The sharp decline in inflation has raised concerns regarding the overall health of consumer demand in Southeast Asia's largest economy, particularly as the middle class continues to shrink. Manufacturing activity has been contracting since July, leading to significant layoffs due to factory closures.
“It needs to be studied further to conclude whether this indicates a decrease in purchasing power. It cannot be concluded solely by the inflation rate figure,” Widyasanti emphasized.
Central Bank's Policy Outlook
In a surprising move last month, Bank Indonesia implemented an interest rate cut, stating that more measures are necessary to support economic growth. Economists anticipate further easing in the fourth quarter, possibly as early as the next meeting scheduled for October 16.
Despite the overall decline in inflation, core inflation—which excludes volatile food and energy prices—continued to rise, reaching 2.09% in September. This increase is attributed to rising prices for gold jewelry and coffee but remains within Bank Indonesia’s target range of 1.5% to 3.5%.
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