Economists: Malaysia’s Inflation For 2022 Likely To Range Between 3% And 3.3%
Author Avatar
(Image: Bloomberg)

Several economists and research houses have predicted that Malaysia’s inflation rate will hover between 3% to 3.3% for 2022, with more interest rate hikes to be expected soon.

Economist from CGS-CIMB, Nazmi Idrus, for instance, maintains his earlier forecast that the consumer price index (CPI) – which serves as one of the indicators of inflation – will hit 3.1% in 2022. He had previously highlighted this figure in June 2022, noting that the price momentum in Malaysia is likely to remain strong ahead. Meanwhile, his forecast for the CPI in 2023 is set at 3.2%.

Idrus also believes that a stronger inflation on a year-on-year basis is likely for August-September 2022, potentially climbing up to nearly 5% before lowering once more in the fourth quarter of the year (4Q22). This is primarily due to the expiry of various pandemic-related support, as well as low base effect.

“That said, we believe price pressure is on the downside. Producer prices showed a percentage month-on-month contraction in July this year of 2.3% (June 2022: contraction of 0.1%), likely reflecting the easing cost pressure amid the decline in global commodity prices,” Idrus explained, adding that this could ease price pressure on consumers moving forward.

(Image: Utusan Malaysia/Mohd. Shahjehan Maamin)

Idrus also believes that Bank Negara Malaysia will continue with its agenda of rate normalisation, with a 25-basis point (bps) hike set to take place in its upcoming Monetary Policy Committee (MPC) meeting on 8 September 2022. This may be followed by another two more hikes in the first half of 2023.

Meanwhile, Maybank Investment Bank (Maybank IB) Research now predicts that the inflation for 2022 and 2023 may hit 3.3% and 4%, respectively. This is a slight dip from its earlier forecast of 3.4% (2022) and 4.1% (2023). The new forecasts take into account the impact of announced and expected rationalisation in price subsidies for essential food, fuel, and energy.

“With the upward trajectory in annual inflation rate plus stronger economic growth in 2Q22 and this year, we expect the central bank to raise the overnight policy rate (OPR) further by 50 bps to 2.75% by end-2022 (25 bps hike each at the 7-8 Sept and 2-3 Nov MPC meetings). We also expect another 25-bps hike early next year to bring the OPR back to the pre-Covid-19 level of 3% by the end of 1Q23,” Maybank IB Research further shared.

bank negara malaysia

As for PublicInvest Research, it maintains its expectation of the CPI expanding by 3% year-on-year in 2022, believing that domestic economic activity will remain steady in 2Q22 as supply chain disruptions and global inflation ease. It also noted that headline inflation may climb higher during some months due to the base effect from support measures implemented in 2021.

“However, the overall readings for the year run the risk of being exceeded should supply-related disruptions be reignited. With the Russia-Ukraine war showing no signs of ending and possibly weighing on energy markets, effects are no longer expected to be as pronounced,” PublicInvest Research noted.

To note, Malaysia’s headline inflation – as measured by the CPI – rose to a higher 4.4% y-o-y in July 2022 (3.4% y-o-y in June). This is driven by rising food and non-alcoholic beverages costs. Similarly, core inflation also increased slightly last month, from 3% in June 2022 to 3.4% in July.

(Source: The Star)

0 0 votes
Article Rating

SHARE

Comments (0)

Subscribe
Notify of

0 Comments
Inline Feedbacks
View all comments
Top Personal Finance News Articles
Post Image
Petrol Price Malaysia Live Updates (RON95, RON97 & Diesel)
The RinggitPlus Team
- 28th September 2022
We provide weekly updates on every Friday at 5pm on the prices of RON95, RON97 and Diesel in Malaysia and a chart that shows the movement of fuel prices across a 6-week period. Bookmark this page now!
Post Image
Astro 4K Ultra HD Broadcast To Be Available For Subscription By The End of This Year
Brian Chung
- 14th August 2018
By the end of 2018, Astro customers will be able to watch football matches in Ultra HD. Read on to know more about the 4k Ultra HD service.
Post Image
Touch n Go RFID: What Malaysian Road Users Need To Know
Jacie Tan
- 10th August 2018
Everyone’s talking about Touch ’n Go RFID being used at Malaysian highway tolls soon – here’s what you need to know about it.
Post Image
Best High Interest Savings Accounts In Malaysia (May 2022)
Pang Tun Yau
- 31st May 2022
Make your money work for you by depositing them into the best high-interest savings accounts in Malaysia!

Related articles

Related Posts Image
Related Posts Image
Related Posts Image
Related Posts Image