by S BIRRUNTHA/pic by Muhd Amin Naharul

THE overall inflationary pressure in Malaysia is expected to remain stable, especially with the unchanged capped retail fuel prices for this year.

MIDF Amanah Investment Bank Bhd (MIDF Research) said food inflation is set to rise strongly amid elevated global commodity prices, subsidy cuts on certain items, and depreciation of the ringgit and US dollar as Malaysia is a net-food importer country.

“We expect food inflation to record an increase of 4.5% for 2022 against 1.6% in 2021, while the non-food Consumer Price Index to increase slower by an increase of 1.9% against 2.8% registered in the previous year.

“As mentioned in our thematic report Quantifying Fuel Subsidy Removal Effects, deceleration of fuel inflation will outweigh the rise in food inflation, hence limiting overall inflationary pressure in Malaysia,” it said in a statement today.

Meanwhile, MIDF Research projected that Bank Negara Malaysia will consider another rate hike of 25 basis points (bps) following the continuous rise in core inflation, reflecting solid underlying domestic demand.

It added that upbeat momentum in distributive trade sales, a dip in the unemployment rate to a new pandemic low at 3.9% in April 2022, and a double-digit expansion rate of external trade provide positive signals of a strong recovery in the economy.

Recently, Prime Minister Datuk Seri Ismail Sabri Yaakob said the government is taking steps to address the issue of the rise in the cost of living.

He highlighted that various actions have been taken to address this crucial issue as it is impacting the people.

He added that the government continues to subsidise several items like chicken and cooking oil.