As domestic demand continued on strengthening, the core inflation rate touched a new peak point at +3.8%yoy in Aug-22. On a month-on-month basis, the core price growth still recorded positive growth, with this upbeat momentum, MIDF believes BNM is very likely to raise the OPR by another 25bps in the last 2022 MPC meeting on Nov-22.
As reported, the headline inflation rose further by +4.7%, the highest since Apr-21. A slight uptick in non-food inflation and new record-high food inflation contributed to the headline Consumer Price Index. However, the research house noticed monthly basis for the three CPI data was already showing signs of moderation. This is in line with the slight correction in global commodity prices and the easing of supply chain pressures domestically and regionally.
Overall price growth in Peninsular Malaysia registered is the fastest pace since Apr-17. Sabah’s CPI hit a new record high at 4.3%yoy while Sarawak’s inflationary pressure touched a 15-month high. The main upward pressure factors were food inflation for all states. Peninsular Malaysia and Sabah saw record-high housing & utilities inflation.
In the environment of elevated global commodity prices and weakening USDMYR, inflationary pressure in Malaysia is affected via higher imported-food inflation. Moving into 3QCY22 onwards, MIDF in view of the slight downward trend in global commodity prices and easing food inflation regionally may ease Malaysia’s food inflation pressure in 2HCY22. As for fuel subsidy, it believes the Government to maintain the current mechanism at least until the end of this year. With domestic demand firming, MIDF keeps its headline CPI forecast at an average of +2.8% for 2022.
