Strong Core CPI Signaled for Another OPR Hike Soon

Malaysia’s food inflation moderated slightly to +6.8%yoy, the lowest rate in three-month.

Strong Core CPI Signaled for Another OPR Hike Soon
Malaysia’s food inflation moderated slightly to +6.8%yoy, the lowest rate in three-month. 

Core inflation hit new peak at +4.0%yoy. As domestic demand continued on strengthening, core inflation rate touched new peak point again at +4.0%yoy in Sep-22.

"On sequential month basis, core prices still recorded growth of +0.3%mom. With this upbeat momentum, we believe BNM is very likely to raise the OPR by another +25bps in the last MPC meeting for this year, in Nov-22," says MIDF.

Global food inflation at 2-year low. Global food inflation as reported by FAO of UN recorded at +5.5%yoy in Sep-22, the slowest since Oct-20.

Among the components, global inflation of oils and sugar recorded contraction rate of -9.5%yoy each respectively. Malaysia’s food inflation moderated slightly to +6.8%yoy, the lowest rate in three-month.

Price growth of Food at Home eased to +5.7%yoy whereas Food Away from Home touched new fresh high at +8.7%yoy.

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"We keep our average CPI forecast to +3.0% for 2022. In the environment of elevated global commodity prices, inflationary pressure in Malaysia is affected via higher food inflation.

"We expect food price growth to record at +5.5% this year among others attributed by further depreciation of USDMYR. As for fuel subsidy, we believe the Government to maintain current mechanism at least until end of this year. With domestic demand firming, we upgrade our headline CPI forecast slightly by +0.2% point to +3.0% for 2022," it says.