KUALA LUMPUR, Dec 23 — Research houses expect headline inflation to moderate in 2022 and end this year at 2.5 per cent after accelerating to a five-month high of 3.3 per cent year-on-year (yoy) in November.
MIDF Research and Kenanga Research forecast headline inflation to average at 2.1 per cent and 2.4 per cent, respectively, next year.
Both sees the headline inflation rate to remain elevated in the final month of 2021.
MIDF Research said December 2021 could see another price growth of above the 3.0 per cent level.
It said the global supply chain constraint will ease and commodity prices to normalise by the middle of 2022.
“On top of that, tightening monetary policy is likely to take place next year with recovery in domestic demand and labour market continuing smoothly.
“If inflation were to spike, we believe the government has enough fiscal bullets to contain inflation, particularly via its subsidy approaches,” MIDF Research said in a note today.
Meanwhile, Kenanga Research said food prices are expected to rise in tandem with the festive season period and are likely to be affected by severe floods in the Klang Valley and other states.
“Rising global food prices as reflected in the latest Food and Agriculture Organisation's Food Price Index (27.3 per cent yoy) and fuel prices amid the post-pandemic supply chain chaos will add to inflationary pressure in the domestic economy.
“Nonetheless, we continue to remain cautious amid rising concerns over the spread of the Omicron variant,” it said.
Food inflation surged beyond a three-year high in November 2021.
Despite a positive economic outlook amid improving domestic Covid-19 situation and ongoing vaccination efforts, Kenanga Research believes that Bank Negara Malaysia (BNM) will keep the policy rate unchanged at the next Monetary Policy Committee meeting in January 2022.
The Department of Statistics Malaysia (DoSM) yesterday said Malaysia's Consumer Price Index (CPI) in November 2021 increased 3.3 per cent yoy to 124.0, influenced by higher prices of food and non-alcoholic beverages, transport and housing, water, electricity, gas, and other fuels.
The significant increase was attributed to higher prices of raw materials for cooking, while the price of chicken — the largest component of meat and the main source of protein for Malaysians, increased 16.7 per cent as a result of higher prices of feed for animals globally.
Fish prices also recorded an increase, with the average price of Indian Mackerel rising to RM15.57 from RM14.68 a year ago.
The DoSM said fuel prices remained high (27.6 per cent) and electricity costs increased 34.6 per cent after the electricity discount was discontinued in September 2021.
“The discontinuation of electricity discount under the Perlindungan Rakyat dan Pemulihan Ekonomi (Pemulih) package in September had an impact on the below RM3,000 income group,” chief statistician Datuk Seri Dr Mohd Uzir Mahidin noted. — Bernama
