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UOB Group’s Senior Economist Julia Goh and Economist Loke Siew Ting assess the newest inflation figures within the Malaysian economic system.
Key Takeaways
“Headline inflation breached the three% stage for the primary time this yr at 3.4% y/y in Jun (from 2.8% in Could). It got here in increased than ours and Bloomberg consensus of three.2%. Worth pressures broadened with extra shopper value index (CPI) parts recording bigger value will increase final month in comparison with the previous month, led by meals and transport parts.”
“We count on CPI development to leap above 4.0% in 2H22 after averaging 2.5% in 1H22. Our 2H22 inflation outlook largely rests on excessive commodity costs, year-ago low base results, persistent foreign money weak spot, modifications in some staple meals costs (i.e. rooster, eggs and cooking oil), and recovering home demand. The brand new focused gas subsidy mechanism, which is at the moment beneath pilot testing, will pose upside dangers to our inflation outlook ought to or not it’s applied over the subsequent few months. As such, our present full-year inflation forecast of three.0% is topic to upward revision subsequent month when the Jul CPI studying is launched (vs. 2.5% in 2021, BNM est: 2.2%-3.2%).”
“The mixture of things together with broadening second-round results on inflation, firmer home financial restoration, and diminishing actual rate of interest hole with US proceed to recommend a necessity for additional coverage normalisation. We count on Financial institution Negara Malaysia to ship one other 25bps charge hike on the subsequent MPC assembly on 7-8 Sep, taking the In a single day Coverage Charge (OPR) to 2.50%.”
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