Malaysia’s food inflation increased to +6.1%yoy, the highest ever recorded. Similarly, the price growth of Food at Home and Away from Home touched a new fresh high at +6.1%yoy and +6.6%yoy respectively.
Among the food items, meat inflation at +11.9%yoy (record high) while fruits and vegetable inflation at more than 4-year high. As a net-food importer, depreciation of RM vs. USD by -6.0%yoy (close to a 5-year low) partially caused the food inflation spike. Moving forward, MIDF Research expects Malaysia’s domestic food inflation to rise at a moderate pace in 2HCY22 following the reduction of food subsidy support on several items and slight deceleration of global commodity prices, particularly agriculture-related prices. In addition, global food inflation as reported by FAO of UN descended to a 4-month low at +23.1%yoy in Jun-22. MIDF believes the expected resumption of grain exports via Ukraine’s Black Sea ports may ease global food inflation pressure in the near term. We forecast food inflation to average at +4.5% for 2022 (2021: +1.5%).
Incidently, Peninsular Malaysia saw the highest food inflation rate. Food inflation surged to a record-high +6.4%yoy in June while Sarawak too saw a fresh high at +5.5%yoy of food price growth. Peninsular Malaysia hit a 6-month high while Sabah and Sarawak recorded a 1-year high in the headline inflation rate. The main contributor among others is food and transport inflation rates. Looking ahead, MIDF views inflationary pressure to moderate in 2HCY22 amid the deceleration of global prices particularly agriculture-related prices.
