MIDF Research has maintained Malaysia’s Consumer Price Index (CPI) forecast at 3% for 2023 on softening inflationary pressure yet depreciated ringgit remained as downside risk factors for domestic food prices.

In a research note today, MIDF Research said it estimated food inflation to remain at the range of 5.5% to 6% in the second half of 2023 due to an externally challenging environment, especially for global agriculture output.

“Prolonged depreciated ringgit, among others, will lead to higher imported inflation particularly via food prices as Malaysia is a net importer for most food products,” it said, adding that non-food inflation is expected to average at 1.5%.

Meanwhile, RHB Investment Bank has also maintained its projection of the headline and core inflation for 2023 at 2.6% year-on-year (y-o-y)  and 3.1% y-o-y, respectively.

It also maintained the 2024 headline and core inflation forecast at 3.3% y-o-y and 3.6% y-o-y, respectively. 

“In the near to medium term, we remain watchful on the potential upside risk emanating from higher food as well as commodity prices.

“For 2024, the inflation trajectory would mainly be driven by changes in domestic policies i.e. revision in services tax coupled with the implementation of targeted subsidies approach,” it added.

The Department of Statistics Malaysia announced today that Malaysia’s inflation eased to 1.9% in September 2023 with the index points registered at 130.8 from 128.3 in the same month of the previous year.

The inflation for the third quarter of 2023 inclined 2% to 130.7 as compared with 128.1 in the same quarter of the preceding year. – Bernama, October 20, 2023.