CGS-CIMB keeps Malaysia’s 2023 inflation forecast at 3pc y-o-y

KUALA LUMPUR, Dec 30 ― CGS-CIMB Securities Sdn Bhd (CGS-CIMB) forecasts Malaysia’s inflation for 2023 to be at a few per cent 12 months-on-year (y-o-y), in contrast to the 2022 forecast (2022F) client value index (CPI) inflation of 3.3 per cent y-o-y.

Head of economics, Nazmi Idrus stated the government’s intervention on issues such as hen charges and petrol and toll costs would proceed to partly contain inflation in the close to time period.

“However, the recent electric power cost hike for non-domestic and non-tiny and medium enterprises (SMEs) (lower voltage) buyers will just take effect on January 2023, and we expect this to direct to some raise in headline inflation.

“Our calculation highlights a chance of the CPI mounting by 10 basis points y-o-y in January 2023F, as around 60 per cent of energy customers in the region are non-domestic buyers, and of these, 60 for each cent are non-SMEs,” he said in a take note now.

Electrical power weighs in on the CPI basket at 2.7 per cent, he claimed, but the second-round impact could be a little bit greater.

Meanwhile, Nazmi claimed November 2020’s sturdy main inflation growth reflected the powerful domestic demand from customers conditions throughout the month, supportive of the ongoing charge normalisation cycle by Lender Negara Malaysia (BNM).

BNM’s statement in November furnished a clear warning that inflationary pressures are probable to stay in 2023, and the central lender highlighted its readiness to keep on being hawkish if important.

“We count on two additional 25 foundation place improves to the overnight plan charge (OPR) to 3.25 per cent in 2023F,” claimed Nazmi.

In November, Malaysia’s CPI rose .3 for every cent thirty day period-on-thirty day period (m-o-m) (Oct 22: +.2 for every cent m-o-m) and 4. for each cent y-o-y (similar to Oct 2022).

Meanwhile, core CPI grew .4 per cent m-o-m (Oct 22: +.1 for each cent m-o-m), boosting y-o-y growth to 4.2 for every cent (Oct 2022: +4.1 for each cent), driven by two elements, specifically foodstuff and motels and dining places. ― Bernama