Malaysia consumer prices ticked up 0.7%m/m, seasonally adjusted (sa), last month, leaving overall headline CPI a touch higher than our expectations at 2.9%oya (J.P. Morgan & Consensus: 2.8%).
JP Morgan in a research report said that core prices, which exclude the most volatile fresh food items and administered prices of goods and services remained flat for the fourth consecutive month, leaving core CPI inflation at 0.7%oya (first chart).
It said that headline CPI inflation expanded 0.2%3m/3m, seasonally adjusted annual rates (saar), in sequential terms. In the details, energy-related prices drove the bulk of October’s expansion with utility and transport costs up 2.6%m/m, sa, and 0.2%m/m, sa, respectively.
“The rise in utility costs was expected due to the expiration of electricity bill subsidies for households under the Pemulih package which ended in September. Meanwhile, the remaining categories recorded modest price gains last month,” it said.
As Malaysia continues to move toward endemic equilibrium, mobility restrictions have been broadly eased, paving the way for recovery in the non-manufacturing sector over the coming quarters.
Looking ahead, it expects labor conditions outside the goods-producing sectors to catch up next year alongside the broader resumption in services, in turn guiding core prices higher, albeit at a gradual pace. Thus, it continues to expect monetary policy tightening of 25bp each in 3Q22 and 4Q22.
