KUALA LUMPUR, 12 August – Malaysia’s central bank, Bank Negara Malaysia (BNM) said that the country’s core inflation is expected to trend higher in the remaining months of this year, due to multiple effects including the base effect from discounts on electricity prices implemented in the third quarter of 2022.
BNM Governor Nor Shamsiah Mohd Yunus said demand will continue to improvise despite the high-cost environment in the country, leading to core inflation averaging higher in 2022.
The second quarter of 2022 saw Malaysia’s headline and core inflation increasing by 2.8 per cent and 2.5 per cent, respectively, compared to 2.2 per cent and 1.7 per cent in the same period last year.
The Governor also said that the Malaysian Ringgit depreciated by 4.6 per cent against the US Dollar in the second quarter of this year, and 6.6 per cent year-to-date (as of 10 August, 2022) broadly in line with the movement of regional currencies.
She added that the extent of upside pressures on inflation is expected to remain partly contained by the existing price control measures, fuel subsidies and the continued spare capacity in the economy.
“Nevertheless, the inflation outlook continues to be contingent on upside risks stemming from the strength of domestic demand, global price developments and domestic policy measures,” she said during the 2Q22 GDP announcement in Kuala Lumpur today.
Nor Shamsiah noted that the higher core inflation reflected an improvement in demand conditions amid the high-cost environment with price increases mainly driven by food away from home and other food items.
ِAccording to the Governor, the decline in the local currency was a result of the strengthening of the US Dollar following aggressive monetary policies in the US, increased risk aversion among investors due to a weaker global growth outlook, and the Russian-Ukrainian conflict.
Source: The Malaysian Reserve/Agencies
