UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the latest inflation figures in Malaysia.

Key Takeaways

“Headline inflation moderated for the second straight month to 2.3% y/y in Jan (from 3.2% in Dec 2021). It matched our estimate but undershot Bloomberg consensus’ 2.5%.”

“The moderation in Jan inflation was purely a result of year-ago high base effects fading in electricity and transport components. This partially cushioned the impact of price gains across most goods and services, particularly food & beverages; furnishing, household equipment & maintenance; recreation services & culture; restaurants & hotels; as well as education.”

“Despite the second month of slower inflation reading last month, risks to inflation are still tilted to the upside. Among key upside risks are global supply chain disruptions, escalating commodity prices, higher wages due to post-pandemic labour shortages and revised national minimum wage, expiry of government’s price control schemes, and potential subsidy rationalization programs. We maintain our 2022 full-year inflation forecast at 3.0% (2021: 2.5%).”