KUALA LUMPUR, Sept 24 — MIDF Investment Bank Bhd (MIDF Research) maintained its forecast for Consumer Price Index (CPI) inflation to be at +2.3 per cent this year against -1.1 per cent year-on-year (y-o-y).

In its Economic Review report released today, the research firm said the main source of price pressure would come from cost-push inflation as the ongoing supply constraints resulted in rising input.

It also said the latest Producer Price Index (PPI) inflation continued to be higher than CPI inflation, signalling pressure on suppliers to pass some of the cost increases to end-consumers.

"We expect the pressure on cost to continue because disruptions from the global pandemic are causing supply chain challenges.

"Meanwhile, the high commodity and crude oil prices will support inflation in transport prices, although the pace of increase is limited by the cap imposed on domestic petrol and diesel prices,” MIDF Research said.

It opined that other measures such as the cap on cooking oil prices and discount on electricity bills would also contain the inflationary impact on consumer prices.

Going forward, MIDF Research foresees that inflation would stabilise around the current level and the diminishing base effect would be balanced by rising cost and recovering demand.

Domestic spending, it added, is expected to pick up following the relaxation of lockdown restrictions and recent improvement in the local Covid-19 situation.

Malaysia’s headline CPI inflation moderated further to 2.0 per cent y-o-y in August 2021 (July 2021: 2.2 per cent y-o-y), in line with the research firm’s expectation. — Bernama