The increase in prices of foods and transport will continue to keep inflation elevated, in view of the high global commodity and oil prices, analysts observed. — Bernama photo
KUCHING: The increase in prices of foods and transport will continue to keep inflation elevated, in view of the high global commodity and oil prices.
Moreover, the cost-push inflation is expected to continue given the continued rise in production costs, analysts say.
However, they have maintained Malaysia’s consumer price index (CPI) inflation forecast at a growth of 2.3 per cent for this year.
According to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), Malaysia’s headline CPI inflation accelerated to 2.9 per cent year on year (y-o-y) in October 2021, slightly above the market consensus of 2.8 per cent y-o-y.
The October 2021 headline inflation was also higher than MIDF Research’s expectation, attributable to the faster inflation in the non-food price of 3.4 per cent y-o-y, compared to 2.5 per cent y-o-y in September 2021.
“Although the October 2021 came in higher than our expectation, thus far the trend in inflation broadly remains within our projection,” the research arm said.
Therefore, MIDF Research maintained its projection for CPI inflation for this year at 2.3 per cent, compared to -1.1 per cent in 2020.
“The increase in prices of foods and transport will continue to keep inflation elevated, in view of the high global commodity and oil prices.
“Moreover, the cost-push inflation is expected to continue given the continued rise in production costs.
“Based on the recent Purchasing Managers’ Index (PMI) survey, input prices and even selling prices continued to increase as producers faced challenges from the supply chain disruption, rising energy prices and shortages of materials.
“This pressure may persist going into next year if the supply challenges continue in the coming months.”
To a certain extent, MIDF Research also expects the recovery in demand will eventually result in some upward pressures on prices as domestic economic activities have been improving following the reopening of the economy after the full lockdown earlier this year.