Malaysia: Inflation remains steady in November
Inflation came in at 4.0% in November, unchanged from Octobers reading. The reading was primarily due to increasing prices for food and non-alcoholic beverages offsetting weaker growth in transport prices.
Accordingly, annual average inflation was unchanged at October’s 3.3% in November.
Finally, consumer prices rose a seasonally adjusted 0.31% over the previous month in November, accelerating from the 0.23% increase logged in October. November’s result marked the highest reading since July.
Looking ahead, inflation should continue moderating, with price stability a key priority for the newly formed government. Price controls and subsidies on key food and energy items kept a lid on inflation in 2022 compared to other global peers, which will likely continue to play a key role in 2023. In addition, the Central Banks monetary policy tightening cycle is set to continue in order to bring inflation back within the 2.0–3.0% target range, in part by preventing steep currency depreciation that could cause import prices to swell; the first meeting for 2023 is scheduled for 18-19 January.
Analysts at the EIU added:
“We forecast that global commodity prices will continue to ease in 2023, which, coupled with an anticipated appreciation of the local currency against the dollar, will ease imported inflationary pressures. Consumer prices are forecast to increase by an average 3.3% year on year in the first quarter of 2023. As producers continue to pass on input costs to consumers, core inflation will remain above 2% in the months ahead before it moderates from the second quarter of 2023.”