Malaysia’s Consumer Price Index (CPI) for January remained unchanged at 1.5% year-on-year (YoY) versus December, in line with expectations, while core inflation slightly eased to 1.8% YoY compared to 1.9% in December.
According to OCBC Senior ASEAN Economist Lavanya Venkateswaran, the stability in headline inflation was slightly below consensus forecasts of 1.6%. Inflation across most categories eased in January, except for utilities and transport.
Food inflation also moderated to 2.0% YoY from 2.3% in December. The impact of the higher services tax and excise duties on certain goods, implemented on January 1, 2024, had a limited effect on inflation in these categories.
The outlook for inflation in 2024 largely depends on the timeline and mechanism of fuel subsidy rationalization. Analysts forecast headline inflation to pick up to 2.5% for the year, suggesting some increase in price pressures in the coming months. However, inflationary pressures are expected to remain manageable.
In light of the stable inflation outlook, analysts anticipate that Bank Negara Malaysia (BNM) will maintain its policy rate unchanged at 3.00% throughout 2024.
The stable inflation figures indicate a steady economic environment, providing some reassurance amid ongoing global uncertainties and challenges.
