Where is Malaysia’s Inflation Headed? Up?

Malaysia’s June 2022 Consumer Price Index (CPI) increased to 3.4% (on an annualised basis). The increase surpassed the average inflation in Malaysia for the period January 2011 to June 2022 (1.9%), according to the Department of Statistics Malaysia (DOSM). Malaysia’s inflation rate (3.4%) was higher than China (2.5%) but lower than Thailand (7.7%), the Philippines (6.1%), South Korea (6%) and Indonesia (4.4%).

Food index increased 6.1% and remained as the main contributor to the rise in inflation during June 2022, according to the Chief Statistician of DOSM.

Other groups except communications also recorded increases and led headline inflation to 3.4%. Transport rose 5.4% followed by restaurants & hotels (5%); furnishings, household equipment & routine household maintenance (3.4%); miscellaneous goods & services (2.2%) and recreation services & culture (2.2%).

Elaborating further on the food index, the DOSM’s Chief Sstatistician said all subgroups in food & non-alcoholic beverages recorded increases between 2.8% and 11.9%.

Meanwhile, food at home and food away from home inclined 6.1% and 6.65 respectively, contributing to the increase in food inflation. Among food away from home that showed increases were roti canai (10.5%), rice with side dishes (9.7%), cooked beef (7.8%) and noodles-based food (7%).

Meanwhile, chicken which is the largest weight in the subgroup of meat (46.1%) rose 17.2% after rising 13.4% in May 2022. The average price of processed chicken in June 2022 was RM10.02/kg as compared to RM8.55 in June 2021. The increase in chicken prices is in line with the increase in global food production inputs such as maize (14.8%), wheat (60.9%) and soybean (19.9%) which are the largest composition in the preparation of chicken feedstuff.

Additionally, pork also recorded an increase of 14.6% from 10.2% in the previous month. This was contributed by the rise in the price of animal feed. Moreover, the spread of African swine fever has also affected pork supply.

For July, inflation could exceed 4% and there are no signs it has peaked. Overall, for 2022 it may average 3.1% according to some analyst. This is a “tax” on the poor and savers who rely on interest from fixed deposits.

Reference:

Pricier roti canai, pork as Malaysia’s June 2022 inflation surges to 3.4%, Cheah Chor Sooi, Focus Malaysia, 22 July 2022