MALAYSIANS will need to continue tightening their belts in 2018, as food and petrol prices are expected to remain high despite a dip compared with prices in 2017.

Economists and analysts also expect fewer new job openings but those still employed could see their wages rise by about 3%.

Experts expect a rise in the ringgit’s value versus the US dollar in 2018 to bring down the price of imports. Malaysia imported RM38 billion worth of food between January and October in 2016.

But the rise in petrol prices at the end of last year is also expected to continue into 2018 on the back of increasing global demand and less supply.

They projected inflation or the rate at which goods’ prices rise to be between 2.7% and 3.5% this year, as opposed to the average 3.8% and 4% in 2017.

Economist Azrul Azwar Ahmad Tajuddin, however, said this does not necessarily mean consumers will see lower food prices in 2018.

Headline inflation will hinge a lot on global oil price trends, which will, in turn, influence domestic fuel prices, he said.  

“Prospects of a stronger ringgit and some reduction in global cost factors in 2018 could cap much of these inflationary strains, although prices for food items and other basic items could remain somewhat elevated,” Azrul Azwar told The Malaysian Insight. 

“After averaging at close to 4% in 2017, headline inflation is expected to moderate, clocking a full-year average of less than 3.5% in 2018.”

In a research note, Ambank Research said the ringgit is expected to be valued at an average of RM4.16 to US$1 in 2018 compared with the average of RM4.31 to US$1 in 2017.

Ambank Research said it projects the inflation rate to average between 2.5% and 3.0% in 2018.

RHB Research expects the inflation rate to average at 2.7% due to stable fuel prices and a stronger ringgit, which will lower the prices of imports.

Last year saw some of the highest rates of inflation which averaged about 4% nationally. In November, the prices of food in five states rose at a higher rate than the national average.

Oil prices could rise in 2018 due to increasing demand from China, declining global stocks and lower output from top oil producers, said Azrul Azwar.

Although other factors, such as US shale oil production, could suppress the global price of oil, he expects the world price of Brent crude to rise to US$70 per barrel in 2018.

According to Bloomberg, Brent Crude oil is currently trading at US$66.68 per barrel.

Although managing their purse strings can be challenging for consumers in 2018, a global management consulting firm said that average salaries in Malaysia are expected to grow by 3.2%.

In 2017, salaries grew by an average of 1.3%, said the Korn Ferry Hay Group (Korn Ferry), according to several reports.

Jobs in the property, construction and financial sectors will see the highest increases.

Those in sectors, such as healthcare, industrial products and, oil and gas, will see the lowest wage growth. – January 4, 2018.