KUALA LUMPUR, Oct 25 — The upward pressure on inflation is expected to stay moving forward, driven by transfer pricing due to the rising cost of businesses arising from higher commodity prices and materials.

This is despite a dissipating low base and a contained fuel price with the government having set the ceiling price for RON95 and diesel at RM2.05 and RM2.15, respectively, year-end, AmBank Research said in a research note today.

"For the full year, we are maintaining our inflation projection at 2.6 — 2.8 per cent with no change to the overnight policy rate (OPR) outlook of 1.75 per cent,” it said.

For the month of September 2021, AmBank Research said Malaysia’s headline inflation rate picked up as it logged a 2.2 per cent year-on-year (yoy) increase compared with 2.0 per cent in August, the fastest pace following the reimposition of the movement control order (MCO) 3.0.

Meanwhile, CGS-CIMB Research projected headline inflation to average 2.4 per cent yoy in 2021 and moderate to 2.2 per cent yoy in 2022 as low base effect falls out of annual comparison.

"With inflation remaining under control, we expect monetary policy to remain pro-growth in the first half of 2022 (1H22) and foresee interest rate normalisation to begin only in 2H22,” it said in a separate note today. — Bernama