Malaysia’s headline inflation rate registered at +1.5%yoy in Nov-23, the lowest since Feb-21. MIDF said the inflation rate was below consensus’ expectations of +1.7%yoy.
Non-food inflation rate maintained at +0.9%yoy while food inflation rate dived to 2-year low at +2.6%yoy. The softening
inflationary pressure among others was due to high base effects, normalisation of global commodity prices and supportive fiscal policies. Core inflation rate recorded lower at +2.0%yoy yet still above pre-pandemic average of +1.7%. Average 11MCY23 headline inflation was +2.6% (2022: +3.4%) and core inflation rate was +3.1% (2022: +3.0%). The softening inflationary pressure is a positive signal especially for domestic demand to stay on expansionary path in 4QCY23 onwards. Also the moderating trend of core CPI provides more reason for BNM to keep its OPR status quo in 2024.
Global food inflation stayed on deflationary mode registering -10.7%yoy in Nov-23, marking 13-straight months of contraction. On consequential month basis, the global food inflation declined by -0.02%mom (Oct-23: -0.9%mom). As of 11MCY23, the food price contracted by -14.0%yoy (2022: +14.3%). Following that, Malaysia’s food inflation rate recorded lower at +2.6%yoy. Price growth of Food at Home receded to more than 2-year low at +1.4%yoy while Food Away from Home stayed at 21-month low +3.9%yoy.
As of 11MCY23, average food inflation registered at +5.1%yoy, equivalent to previous year’s +5.7%. The moderation of food inflation rate was faster than expectations, hence the house said it foresees overall price growth to average at +2.7% for this year. Non-food inflation is expected to average at +1.5%.
- Moving into 2024, MIDF believes the overall inflation rate is predicted to trade higher at +3.2% as the fuel-targeted subsidy to be rolled-out as early as May-24. In its opinion, the government may introduce a managed-float price mechanism for RON95 at RM2.25-2.35 per litre and provide cash-handouts to those eligible as guided by the PADU database. Thus, non-food inflation is set to rise by +2.5% while better domestic supply and normalised global commodity prices shall push food inflation rate lower at +4.5% in 2024.
