A drop of 2.4 percent year on year was experienced by Malaysia in its price index in August, which became its third straight month of commodity price deflation.

In June 2009, consumer price inflation turned negative for the very first time since August 1986. It was when Malaysia recorded one month of deflation. 

A 30 percent climb in taxi and bus fare that took effect from Aug 1 helped CPI to rise month-on-month by 0.2 percent, on an unadjusted basis. 

As per the economists, the persisting base effect from last year, when global food and energy costs were hiking, were mainly responsible for August's decline. 

It should be noted that Transportation, fuel, housing and utilities were down 19.3 percent on the year, and they make up 37.3 percent of the total weighting of the CPI. 
 
The rates were left unchanged by Malaysia's central bank during its last monetary policy meeting in August. The central bank was expecting the inflation to turn positive with improvement in the economy.

It will be on 28th October now that the bank's next monetary police meeting will take place, at which most economist predict the bank to keep rates on hold until at least the middle of 2010.