KUALA LUMPUR – The upward pressure on inflation is expected to stay moving forward driven by transfer pricing due to the rising cost of doing business arising from higher commodity and material prices.
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, until 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% with no change to the overnight policy rate (OPR) outlook of 1.75%,” it said.
For the month of September 2021, AmBank Research said Malaysia’s headline inflation rate picked up as it logged a 2.2% year-on-year (y-o-y) increase compared with 2.0% 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% y-o-y in 2021 and moderate to 2.2% y-o-y 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, October 25, 2021
