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Malaysia Inflation January 2024

Malaysia: Inflation holds steady in January

Inflation was broadly stable at December’s 1.5% in January. The figure represented the joint-lowest inflation rate since February 2021. A softer increase in prices for food and non-alcoholic beverages largely offset stronger price pressures for transport and housing and utilities.

The trend pointed down slightly, with annual average inflation coming in at 2.3% in January (December: 2.5%).

Lastly, consumer prices increased a seasonally adjusted 0.15% in January over the previous month, following the 0.23% rise seen in December.

Analysts at the EIU commented on the outlook:

“We expect consumer price inflation to average 2.6% in 2024, up from 2.5% in 2023. Sticky prices will reflect domestic policies, such as the removal of price caps and fuel subsidies, and higher services taxes. In addition, the El Niño phenomenon will also exert upward pressure on food prices, although we assess the likely overall impact on inflation to be moderate.”

United Overseas Bank analysts Julia Goh and Loke Siew Ting said:

“Overall, January’s inflation reading together with a softer real GDP growth for 4Q23 and persistent currency weakness reinforce our view that Bank Negara Malaysia (BNM) will continue to stay the course in holding the Overnight Policy Rate (OPR) steady at 3.00% throughout 2024. The continuation of positive real interest rates, budgeted government cash assistance for the vulnerable groups and market expectations of global policy rate easing later in the year will give BNM breathing room on interest rates.”

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