The inflation rate is forecast at between 2.8% and 3.3% in 2023, the Ministry of Finance (MoF) said in its Economic Outlook 2023 report released today.
The projection is based on stable commodity prices as well as a gradual move towards targeted subsidies mechanism in ensuring a more equitable distribution of resources.
MoF said for the whole year, inflation is anticipated at 3.3%.
“The Consumer Price Index (CPI) grew at 3.1% during January to August 2022, attributed to pressures on certain fresh food prices due to high input costs from rising non-energy commodity prices,” the report said.
“Of the total CPI, food and non-alcoholic beverages (food) inflation registered 5.1% during the first eight months of 2022 compared with 1.4% recorded during the same period last year,” it said.
Nevertheless, MoF said the increase in food inflation has been mitigated by the existing price controls and provision of subsidies for selected food items.
On another note, MoF said the Producer Price Index (PPI) is expected to moderate on account of stable global input costs in 2023.
It said the PPI by local production increased by 10.2% during the first seven months of 2022, attributed to higher global commodity prices particularly crude oil and natural gas.
By sector, the surge in PPI was contributed by a significant increase in the mining (21.1%), agriculture, forestry and fishing (14.1%) as well as the manufacturing (9.1%) sectors.
“The PPI is expected to remain stable throughout the year due to normalisation of growth in input costs,” it said.
MoF said the government will continue to monitor global develoment as well as implement appropriate policies and reform initiatives to strengthen the economy and fiscal position to withstand potential external shocks, improve the people’s livelihoods and enhance business resilience.
