It wasn’t too long ago that Malaysia was moderating high inflation like many other countries. Inflation has cooled and is expected to be stable till year-end. (Although cost of living may not be addressed). In 2022, the pace of consumer price increases was at about 4.2% but latest data puts it at 1.8%.
Easing global supply chain disruptions, for one, has been responsible for this ease in price spikes. However, for 2025, the risk of inflationary pressure will be back, due largely to the implementation of key economic reforms or removal of subsidies and increase in public/private sector wages.
Socio-Economic Research Centre
(SERC) reckons there are upside risks to headline inflation next year given the
anticipated fuel subsidy rationalisation as well as higher private and public
sector wages. Inflation will increase by 2.5% to 3% in 2025 compared with the
estimated 1.9% for 2024 according to SERC.
Malaysia’s current inflation rate of below 2%, reflects the easing of price pressures. The current low and stable inflation is also supported by the ringgit’s strength.
Since March 2020, prices have
collectively risen by 10.17%. Food and beverage prices rose by 15.73%,
transport prices by 17.21% and restaurant and accommodation services by 15.32%.
That’s cost of living!
Bank Negara is expected to keep the benchmark overnight policy rate at 3% for the rest of 2024 and into the new year, to curb the anticipated inflationary pressure and to continue to support the ringgit. But more needs to be done if the Feds fail to cut the Fed Fund rate in the U.S. And with Trump’s victory, tariffs will now be in place and inflation will spike in the U.S. and other parts of the world. So, brace for a crash!
Reference:
Inflation woes to return, Yvonne Tan, The Star, 4 November 2024
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