KUALA LUMPUR (May 23): Malaysia’s food inflation is set to stay on an upward path in the coming months amid elevated global commodity prices, domestic supply chain disruptions and depreciation of the ringgit. 

MIDF Research said Malaysia, as a net food-importing country, is highly exposed to global shocks in the food supply chain.

‘’Global food inflation remains elevated, particularly the prices of corn, grain and vegetables.

‘’Nevertheless, we opine that overall inflationary pressure will remain stable as fuel inflation continues to be on a downtrend,’’ it said in an economic brief on Monday (May 23).

The research house said the deceleration of fuel inflation will outweigh the rise in food inflation assuming that the government maintains the current capped fuel prices of RON95 petrol and diesel.

‘’In our thematic report ‘Oil Exports Rebound & Inflation Concerns’, we forecast that Malaysia’s headline inflation will stay below 3% even if food inflation averages at 5%, while fuel prices are capped at current levels.

‘’Unless average food inflation surges to 10%, overall inflation is expected to average at 4.6%,’’ it said.

MIDF added that in the worst-case scenario, average headline inflation would rise to 8.9% if the government opts to float fuel prices and food inflation averages at 10%.