Headline inflation to average between 2% and 3.5% in 2024


HEADLINE inflation is expected to remain moderate amid contained cost pressures from easing global supply conditions.

Price pressures from tax changes and utility tariffs are assessed to have a marginal impact on headline inflation, according to the Economic and Monetary Review 2023 report.

Additionally, the impact of exchange rate depreciation on inflation will be contained by administered prices and relatively stable firm pricing behaviour.

Core inflation is also expected to moderate, but remaining above its long-term average. Limited demand pressures, stable near-term sentiments on economic conditions and wage growth that is in line with productivity increases, will likely contain upward pressure to underlying inflation.

According to the report, inflation outlook remains highly subject to upside risks due to potential price adjustments on food and energy items, as well as external pressures from exchange rate and global commodity price developments.

It noted that the direct impact on headline inflation will likely dissipate within a year, but there are upside risks from knock-on effects and wage-price dynamics.

However, the immediate effect will vary based on the size, timing, and extent of the targeted aid.

On the other hand, downside risks to inflation outlook emanate from weaker global growth weighing on commodity prices and cost pressures.

Headline inflation slowed down in 2023 compared to its peak in 2022, averaging 2.5% for the year (compared to 3.3% in 2022).

The moderation was driven by broad-based easing in both core and non-core inflation.

In particular, lower inflation for fuel (2023: -1.6%; 2022: 5.1%) as well as food and non-alcoholic beverages (2023: 4.8%; 2022: 5.8%) were among the main drivers contributing to softer headline inflation.

In 2023, the government began introducing several subsidy rationalisation measures including the revision of electricity tariff for households with higher electricity usage and the removal of chicken subsidy and price controls.

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

   

Next In Business News

Swift Energy aims to raise RM70.06mil from ACE Market IPO
3REN unit inks MoU for Invest Penang incentive package
Foreign selling on Bursa Malaysia continues with net outflow of RM761.4mil
Proton registers sales of 12,194 units in Nov
Ringgit slightly higher against greenback amid mixed US labour data
Profit-taking returns as consolidation continues on Bursa Malaysia
Trading ideas: Itmax, Tanco, E&O, Inta Bina, Crescendo, OSK, SNS, Cypark, BFood, KIP REIT, Kawan, FSBM, Colform, Winstar
Electronics industry needs policy backing
Time for South Korea to become a G9 member
Malaysian stocks see foreign sell-off

Others Also Read