- Inflationary pressure is mainly caused by cost-push factors namely constraint in the supply-side and elevated energy prices with crude fuel skyrocketing 59.5%, says MIDF Research.
- “We view the pick-up in inflationary pressure as mainly caused by cost-push factors namely constraint in the supply-side and elevated energy prices. Double digit pace in producer price index, electricity and transportation inflation among others contributed towards the rising inflationary pressure,” it says.
- It says food inflation surged beyond 3-year high. Malaysia’s headline CPI inflation accelerated to +3.3%yoy in Oct-21 (Oct-21: +2.9%yoy), the biggest gain in 5-month.
- The faster pace in overall inflation was due to both food and non-food prices. Food inflation registered at +2.7%yoy, the highest since Mar-18 while non-food price growth hit 5-month high at +3.6%yoy.
- Excluding volatile prices, core CPI inched up to more than 1-year high at +0.9%yoy, reflecting the continous recovery of domestic demand.
Declining Non-fuel Inflation
- Looking at transportation cost, non-fuel inflation is on a declining trend and is in fact down by -2.9%yoy, the largest contraction rate ever recorded in Nov-21.
- “With the reopening of the domestic economy including interstate movement, fuel cost for transportation surged by +27.6%yoy.
- “As for producer’s inflation point, crude and intermediate materials make up the key stages of production. Crude fuel which is part of crude materials skyrocketed by +59.5%yoy while processed fuel & lubricants involved in the intermediate stage jumped by +21.9%yoy in Nov-21.
- “However, the strong growth rate is indirectly contributed by a low-base effect as more economies reopened amid higher vaccination rate in 4Q21 compared to 4Q20 when lockdowns and restrictive measures were still in place for most countries.” says MIDF.
