INFLATION HAS NOT AFFECTED MALAYSIA'S GROWTH

KUALA LUMPUR, May 3 (Bernama) -- Inflation has not affected Malaysia's growth much as it has been under control, according to Public Bank, currently the biggest domestic bank in Malaysia.

The bank said in its "Economic Review - May 2011" edition, that robust domestic demand, continued to exert upward pressure on prices in Malaysia due to sustained economic activity.

"Headline inflation in Malaysia is expected to average 2.5-3.5 per cent in 2011 on the back of rising commodity and food prices, which will continue to be influenced by supply uncertainties, geopolitical tensions and strong demand from the emerging market economics.

"While further adjustments to administered prices in Malaysia are expected in 2011, these will be gradual," it added.

In 2010, several adjustments in the retail prices of petrol, diesel, liquefied petroleum gas and sugar, resulted in the pass-through effect of high global prices to domestic prices.

"The adjustments in the administered prices helped the Malaysian economy to adjust to movements in global and international prices," Public Bank said.

It said in the past 30 years, Malaysia has experienced three short periods of high price pressure, from 1980-1982, 1997-1998 and 2008. But the country's growth remained healthy at 5.9 per cent annually in the 1980s, 7.3 per cent in the 1990s and five per cent in the 2000s.