Monthly trade data from the government showed both merchandise exports and industrial output growing at a sluggish pace in January. Fears of stagnation in industrial output and lower export sales were evident in a quarterly business survey carried out by the Malaysian Institute of Economic Research (MIER). The MIER Business Conditions Index (BSI) fell below the "boom or bust" line of 100 in the fourth quarter of 2010 compared with the previous quarter. Merchandise exports grew by just 3% year on year in January 2011, a slower pace of growth than in the previous month, when exports grew by 4.6%. The small increase in exports was largely owing to rising global prices for petroleum goods. Exports of electrical and electronic products-Malaysia's largest export category-declined by 19% year on year. Merchandise imports, however, continued to grow at a rapid pace, increasing by 13.5% year on year, following an increase of 10.3% in the previous month.

The annual rate of year-on-year growth in manufacturing slowed to 4.5%, compared with 8.2% in December, while total industrial production, including mining and electricity output, expanded by only 1%. Both segments had the slowest rates of growth since November 2009. The strongest year-on-year growth, of 16%, was recorded for non-metallic mineral products, basic metal and fabricated metal products. This category is increasingly benefiting from domestic demand-led investment and a boom in construction.

The consumer price index (CPI) continued to show gains on a monthly and annual basis. The CPI increased by 0.6% month on month in January and by 2.4% from the year-earlier period. The relatively strong increases in January were largely because of higher prices of food and non-alcoholic beverages, accounting for almost one-half the annual rate of change, while more expensive transport, owing to higher fuel prices, accounted for one-quarter of the annual rate of change. Inflationary pressures are building elsewhere. The price index for restaurants and hotels rose by 4.6% year on year, while the index for alcoholic beverages and tobacco increased by 6.4%.