Malaysia's inflation to edge up to 1.5%

Full year data may hit 1.7%.

According to DBS, December CPI inflation due this week will likely inch higher to 1.5% YoY. This places full year inflation for 2012 at 1.7%, exactly in line with DBS' long held forecast.

Nevertheless, the key point to note is that after an entire year of gradual decline in the headline number, last December’s figure will mark the turn in inflation for Malaysia.

Here's more from DBS:

Expect a broad-based gradual increase in inflation readings in the coming months as the effect of strong domestic demand, rising property prices and wage costs start to dig in.

In fact, while our central view is for Bank Negara to hold the policy rate steady at 3.00% right through the year, the risk of a rate hike to anchor inflation expectation is rising.