Inflationary Pressure To Remain Stable In Malaysia

According to Prime Minister  Datuk Seri Ismail Sabri Yaakob, the government is taking action to address the issue of the rising cost of living. The Prime Minister claimed that numerous steps have been done to solve this pressing problem because it affects the populace.

Overall inflationary pressure in Malaysia is expected to remain stable especially with the unchanged capped retail fuel prices for this year, says MIDF.

Food inflation is set to rise strongly amid elevated global commodity prices, subsidies cut on certain items and depreciation of MYRUSD as Malaysia is a net-food importer country.

Deceleration of fuel inflation

“We expect food inflation to record +4.5% for 2022 (2021: +1.6%) while non-food CPI to increase slower by +1.9% against +2.8% registered in previous year.

“As mentioned in our thematic report Quantifying Fuel Subsidy Removal Effects, deceleration of fuel inflation will outweigh the rise in food inflation, hence limiting overall inflationary pressure in Malaysia.

“For this week MPC meeting, we believe BNM will consider for another rate hike of 25bps following the continuous rise in core inflation, reflecting solid underlying domestic demand,” says MIDF.

In addition, upbeat momentum in distributive trade sales, dip in unemployment rate to new pandemic low at 3.9% in Apr-22 and double-digit expansion rate of external trade provide positive signals of strong recovery in the economy.