KUALA LUMPUR: AmBank Research expects Bank Negara to increase the overnight policy rate (OPR) by 50 basis points (bps) at the upcoming meeting in July, bringing the OPR to 2.50%.
“We expect inflation to be between 2.8% - 3.0% for 2022. With the first five months' average at 2.4%, to achieve our target of 2.8%-3.0%, the next seven months' average should hover between 3.0% and 3.5% which is seen within our target. Last year’s average between June 2021 to December 2021 was 2.8%,” group chief economist/head of research Anthony Dass said in the report.
AmBank said the country’s overall inflation in May 2022 stood at 2.8% year-on-year (YoY), bringing the first five months' average inflation to 2.4% YoY. On month-on-month, overall prices increased by 0.6%.
AmBank said despite the current ceiling price for a standard whole chicken being set at RM8.90 per kg, the average price for chicken in June 2022 was RM9.70/kg.
“This implies that sellers are selling above the price ceiling by 9%, which would certainly have an impact directly and indirectly on the overall underlying inflation of households,” it said, adding that the government had decided not to remove the ceiling price for chicken but introduce a new ceiling price.
“We hope by reintroducing the new ceiling price for chicken, sellers will be able to accommodate this new price without still eating into their cashflow that has resulted to some winding up.
“Also by adhering, there would be less pressure both directly and indirectly on the cost of living of households. The weightage of chicken (meat) is 2.5% of overall CPI basket (8.8% of overall food),” AmBank said.
