Malaysia highly exposed to global shocks in food supply chain

KUALA LUMPUR: Malaysia’s food inflation is set to stay on an upward path in the coming months amid elevated global commodity prices, domestic supply chain disruptions and depreciation of the ringgit.

MIDF Research said Malaysia, as a net food-importing country, is highly exposed to global shocks in the food supply-chain.

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‘’Global food inflation remained elevated, particularly the prices of corn, grain and vegetables.

‘’Nevertheless, we opine overall inflationary pressure will remain stable as fuel inflation continues to be on a downtrend,’’ it said in an economic brief today.

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The research house said the deceleration of fuel inflation will outweigh the rise in food inflation assuming the government maintains the current capped fuel prices of RON95 petrol and diesel.

‘’In our thematic report ‘Oil Exports Rebound & Inflation Concerns’, we forecast that Malaysia’s headline inflation to stay below 3.0 per cent even if food inflation averaged at 5.0 per cent, while fuel prices are capped at current levels.

‘’Unless average food inflation surged to 10.0 per cent, overall inflation (is expected) to average at 4.6 per cent,’’ it said.

MIDF Research added that, in the worst case scenario, average headline inflation would rise to 8.9 per cent if the government opted to float fuel prices and food inflation averaged at 10.0 per cent. - Bernama