Malaysia: Consumer Confidence Boosted as Inflation Hits 3-Year Low

In a positive turn of events, the headline inflation rate reached a close-to-3-year low at +1.8% in October 2023, a figure below the market consensus of +1.9% and the lowest since March 2021. This downward trend in inflation, both in headline and core rates, signifies favorable conditions for consumer demand.

The core inflation rate recorded a decrease to +2.4% year on year, still above the pre-pandemic average of +1.7%. The softening inflationary pressure is seen as a positive signal for domestic demand, expected to stay on an expansionary path in the fourth quarter of 2023 and beyond.

Read More News

Global Food Inflation Sustains Deflationary Trend

Global food inflation has continued its deflationary trend, marking 12 consecutive months of contraction with a year-on-year rate of -10.9% in October 2023. On a consequential month-to-month basis, global food inflation declined by -0.5%, following a -0.2% contraction in September 2023.

As of the first 10 months of the year, food prices contracted by -14.3% year on year (compared to +14.3% in 2022). Malaysia’s food inflation rate recorded a lower +3.6% year on year, with Food at Home experiencing a more than 2-year low at +2.1% year on year, while Food Away from Home remained at a 17-month low of +5.6% year on year.

2023 Inflation Outlook and Consumer Confidence

With the average food inflation at +5.3% year on year as of the first 10 months of 2023, matching the previous year’s +5.7%, analysts expect the headline inflation to average at +2.7% for the year.

This faster-than-expected moderation in the food inflation rate contributes to the overall prediction, while non-food inflation is anticipated to average at +1.5%. The economic landscape appears to be supportive of continued consumer confidence and economic growth.

Cover Photo: WIKI