Malaysia’s food inflation to remain on upward path, says firm

 

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

KUALA LUMPUR: 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 the 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 overall inflationary pressure will remain stable as fuel inflation continues to be on a downtrend,” it said in an economic brief today.

The research house said the deceleration of fuel inflation will outweigh the rise in food inflation assuming 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 to stay below 3% even if food inflation averaged 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 Research added that, in the worst-case scenario, average headline inflation would rise to 8.9% if the government opted to float fuel prices and food inflation averaged at 10%. - FMT