Malaysia’s headline inflation rate came in at +1.5%yoy the first month of 2024. MIDF said it noticed that the rate plateaued since Nov-23, the lowest since Mar-21. The inflation rate was slightly lower than market consensus of +1.6%yoy. Non-food inflation rate stabilised at +1.1%yoy while food inflation rate moderated to 27-month low at +2.0%yoy. The continued softening inflationary pressure among others was due to normalisation of global commodity prices and supportive fiscal policies.
Core inflation rate recorded lower at +1.8%yoy, almost 2-year low. Hence, the house believes BNM will keep its OPR status quo throughout 2024. Looking into 1HCY24, we should expect gradual pick-up in overall prices following increase in utility charges, implementation of higher SST rate to 8.0% (except for food & beverage and telecommunications) and 10% for
low value goods tax (LVGT). In the later half, we opine that it is possible that the roll-out of fuel targeted-subsidy
may see higher retail fuel prices.
Moving into 2024, MIDF expects overall inflation rate may register at +3.2% on the assumption that the fuel-targeted subsidy would possibly be rolled-out as early as Jun-24. It also opines the government may introduce a managed-float price mechanism for RON95 and provide cash assistance to those eligible as guided by the PADU database. Thus, it may see non-food inflation to come in at +2.5% while better domestic supply and normalised global commodity prices shall push food inflation rate lower at +4.5% in 2024.
