• Inflation accelerated to +4.4% YoY; 0.4% MoM in July

• Food inflation jumped to +6.9%.; Transport inflation rose further by +5.6%

• Core inflation quickened to +3.4% YoY

• FAO’s food price index falls but global inflation continues accelerating in July

• Inflationary pressures to stay elevated

Malaysia’s inflation, as measured by the consumer price index (CPI), increased to a 14- month high of 4.4% YoY in July as the CPI's food and non-alcoholic beverage component remained as the main contributor to inflation. Food prices rose at a new record peak of 6.9% YoY with 81.3% or 449 items (out of 552 items, Jun: 80.8% or 446 items) witnessing an increase in their prices, of which 53 items rose more than 10.0% (Jun: 48), 57 items showed a decline (Jun: 54), and 46 items remained unchanged (Jun: 52). Besides, the increase was also due to the lower base effect last year as a result of the electricity bill discount, costlier vehicle purchases after the sales tax exemption expired on 30 Jun 2022 as well as upward adjustments in prices of some essential food items (i.e., chicken, eggs, and cooking oil) and services. On a monthly basis, the CPI were up 0.4% in July, the least in three months, easing from a 0.6% rise in June.

Food inflation accelerated to 6.9% YoY (Jun: 6.1%), the highest level since Apr 2009, with non-food price at 3.2% YoY (Jun: +2.1%). CPI without fuel, which covers all goods and services except RON95, RON97 and Diesel, rose 4.2% YoY (Jun: 3.1%). Meanwhile, nondurable goods advanced by 6.4% YoY (Jun: +4.5%), while durable goods price increased by 3.3% in July (Jun: +3.1%). The prices of semi-durable goods grew 1.2% in July (Jun: +0.8%).

The inflation for the period of January to July 2022 increased 2.8% YoY (Jan-Jul 2021: +2.3%).

Source: BIMB Securities Research - 30 Aug 2022