KUALA LUMPUR • Malaysia's consumer price index (CPI) rose to an eight-year high in February, but it is unlikely to lead to any changes in monetary policy.

Annual inflation grew 4.5 per cent in February, the highest since November 2008 when it hit 5.7 per cent. In January, the annual rate was 3.2 per cent.

Economists said a fuel price hike in February and a low base stemming from a cut in transport costs from last year contributed to the month's high inflation rate.

The pass-through of higher global oil prices to domestic fuel costs will be the key driver of inflation this year, said Mr Ng Weiwen, an economist at the Australia & New Zealand Banking Group in Singapore.

Inflation may accelerate further to about 5 per cent this month, he said.

"However, growth dynamics do not point to the emergence of strong demand-pull inflationary pressures," Mr Ng said. "The central bank is likely to maintain its policy rate at 3 per cent through 2017."

Transport costs surged 17.9 per cent in February from a year ago, after increasing 8.3 per cent in the previous month.

Food prices, which make up 30 per cent of the CPI basket, rose 4.3 per cent from a year ago.

Rising inflation, however, was not seen as worrying Malaysia's central bank, as it was mainly due to the adjustments in domestic fuel prices, said Mr Brian Tan, an economist with Nomura in Singapore.

"We don't foresee any changes to policy as it's clear they remain quite cautious to any potential downside risk to growth, and they don't want to jump the gun too early," he said.

Bank Negara said last Thursday it expected inflation to average between 3 and 4 per cent this year.

Mr Edward Lee, regional head of research at Standard Chartered, said: "They are watchful now but, at the same time, I think they are looking beyond this cost-push inflation."

Policymakers have already adjusted their inflation forecasts higher, so they have "already pre-empted this increase in the headline inflation", he said.

BLOOMBERG, REUTERS