KUALA LUMPUR: Malaysia’s Consumer Price Index (CPI) rose by 2.2% to 125.6 in March 2022 against 122.9 in corresponding month last year – surpassing the average inflation for the January 2011 to March period which stood at 1.9%, according to the Statistics Department.
In a statement, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the rise in headline inflation was mainly driven by the 4% year-on-year (y-o-y) increase in food and non-alcoholic beverages.
“Food inflation remained as a major contributor to inflation. The 4% growth in the food and non-alcoholic beverages group was largely due to an increase in the food at home component which rose by 4.3% compared with 4.1% recorded in February,” he added.
Mohd Uzir said the meat subgroup continued to be the main contributor to the food inflation, rising by 7.6% in March.
“Chicken, the biggest component in the meat subgroup, expanded 10.5%, while beef rose by 4.3%,” he added.
Meanwhile, the rise in furnishings, household equipment and routine household maintenance (3%), restaurants and hotels (2.9%) and transport (2.6%) had also contributed to the overall CPI.
Miscellaneous goods and services also grew by 1.9%, while recreation services and culture expanded by 1.1%.
Both housing, water, electricity, gas and other fuels index, as well as education, registered an increase of 0.9%, respectively, while the alcoholic beverages and tobacco index, as well as health, increased marginally by 0.5% and 0.2%, respectively.
On a monthly basis, the March CPI increased 0.3% compared with February, attributed to the growth in transport (1.1% ) and miscellaneous goods and services (0.6%).
Mohd Uzir said all states recorded increases in inflation, with Selangor and Putrajaya rising above the 2.2% national inflation level at 2.9%.
Core inflation registered an increase of 2% y-o-y in March 2022, with the transport group recording the highest increase at 3.9%.
Other groups which recorded an increase were the food and non-alcoholic beverage group (3.5%), furnishings, household equipment and routine household maintenance (3%), restaurants and hotels (2.9%), miscellaneous goods and services (1.9%) and recreation services and culture (1.1%).
Meanwhile, MIDF Research is upgrading its CPI forecast to 2.5% from 2.1%.
“Following the surge in global commodity prices, we opine Malaysia’s inflationary pressure to be affected indirectly especially via higher food inflation at 3.5% (initial projection: 2.3%). Since the government is to continue with its fuel subsidy mechanism, we foresee fuel inflation to remain decelerating and causing non-food inflation to stay low at 2.1% in 2022 (2021: 2.8%).
“With inflation remaining within 2% to 3%, Bank Negara will likely increase the overnight policy rate by 25 basis points to 2% in the second half of the year on the back of sustained economic growth.
“Nevertheless, we think the government will also take actions to contain inflation should the rise in commodity prices and prolonged supply disruptions in the international market lead to stronger inflationary pressures,” it noted.
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