The increase in prices of foods and transport will continue to keep inflation elevated, tracking the upward movement in the global commodity and oil prices, analysts observed. — Bernama photo
KUCHING: Analysts have maintained their consumer price index (CPI) inflation forecast at 2.3 per cent for this year, as the increase in prices of foods and transport will continue to keep inflation elevated.
Despite the higher-than-expected inflation in September 2021 at 2.2 per cent year on year (y-o-y), the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) viewed the broad trend in CPI as still close to its projection.
“As such, we maintain our projection for CPI inflation to rebound to 2.3 per cent this year (-1.1 per cent in 2020),” MIDF Research said.
“The increase in prices of foods and transport will continue to keep inflation elevated, tracking the upward movement in the global commodity and oil prices.”
That said, the research arm noted the cap on domestic fuel prices and the electricity bill discounts helped to limit the upward inflationary pressures on the overall prices.
“Nevertheless, the cost-push inflation is expected to continue given the continued rise in production costs following the ongoing challenges in the supply chain, rising energy prices and shortages of materials.
“There is also a possibility that prices will increase further going into next year as the rise in energy prices and supply chain challenges are expected to persist in months to come.”
On the other hand, given the further relaxation of the lockdown restrictions and with most states having moved to Phase 4 of the National Recovery Plan, MIDF Research foresaw the recovery in demand will eventually result in increased pressures on prices going forward.