Driven by sharper rise in Food prices, inflation jumped to +4.4%yoy in Jul-22.
Core inflation rose further, the highest in 6 years. Core inflation accelerated further to +3.4%yoy, fastest gain since Apr-16, indicating increased underlying price pressures from surging domestic demand.
Meanwhile, Malaysia’s headline inflation rose higher to +4.4%yoy, similar to Bloomberg consensus.
Food inflation continued to spike. Inflation for the food & non-alcoholic beverages increased further to +6.9%yoy, the highest ever recorded. Rate of price increased for both Food at Home and Away from Home touched new fresh high at +6.4%yoy and +7.8%yoy, respectively.
Inflation and RM Depreciation
As a net-food importer, further depreciation of RM against USD by -0.9%yoy in Jul-22 also partially contributed to the spike in food inflation.
"We keep our average CPI forecast unchanged at +2.8% for 2022. In the environment of elevated global commodity prices, inflationary pressure in Malaysia is driven by higher food inflation.
"We expect food price increases to record higher inflation at +4.5% this year (earlier estimate: +3.5%), among others attributable to the removal of subsidies on several food items.
"Furthermore, increases in production costs will also contribute towards higher selling prices. On a positive note, the slight downward trend in global commodity prices may ease Malaysia’s food inflation pressure in 2HCY22," says MIDF.