Higher inflationary pressures expected this year

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL

THE Socio-Economic Research Centre (SERC) estimates inflation to increase by 3% in 2022, higher compared to an estimated 2.5% in 2021.   

SERC executive director Lee Heng Guie said headline inflation, as measured by the Consumer Price Index, has consistently climbed higher to 3.3% in Nov 2021, marking four months of continuous rise from 2% in August.

“Besides continued double-digit increases in transport prices, food prices and non-alcoholic beverages have climbed higher (2.7% in November 2021, highest since March 2018). Among the significant increases in food prices were fresh meat and fish, eggs, oils, and fresh vegetables.

“Prices for financial services, housing, water, electricity, gas and other fuels as well as furniture and furnishings also increased substantially,” he said during SERC online media briefing on Malaysia’s quarterly economy tracker (Oct-Dec 2021) & 2022 outlook today.

The Producer Price Index (PPI) has continuously increased for ten straight months with eight months of double-digit growth in November 2021.

The main increases came from crude materials for further processing (33.4% year-on-year in Nov; 31.2% in Jan-Nov 2021) as well as intermediate materials, supplies and components (12.1% in Nov; 7.6% in Jan-Nov 2021).

Given rising cost of raw materials and persistent supply disruptions, the increase in PPI is likely to continue in 2022, at least in the first half-year.

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