Inflation rate expected to be at 2.1 percent in 2022

 

The inflation rate is forecast to record 2.1 percent in 2022, following better economic prospects and stable crude oil prices.

In the Economic Outlook 2022 report released today, the Ministry of Finance (MoF) said consumption demand for goods and services by households is expected to be supported by expectations of improved employment conditions.

“Furthermore, the projected growth in private investment activities and the implementation of the 12th Malaysia Plan (12MP) will further augment domestic demand,” it said.

Besides, MoF said, the Producer Price Index (PPI) is forecast to stabilise following the anticipated recovery of domestic and global economies.

It said the PPI by local production increased by 8.2 percent during the first eight months of 2021 and is expected to remain stable throughout the year due to the normalisation of input costs.

“The growth is attributed to higher global commodity prices, particularly crude oil and natural gas,” MoF said.

By sector, the surge in PPI was particularly contributed by a significant increase in agriculture, forestry and fishing (36.6 percent) followed by mining (30.2 percent), manufacturing (4.3 percent) and water supply (0.7 percent).

In contrast, the index for the electricity and gas supply sector dropped by 0.7 percent during the period.

Meanwhile, MoF said the Consumer Price Index (CPI) rose by 2.3 percent during the first eight months of 2021, and the trend is expected to continue for the rest of the year.

“Similarly, the core index increased marginally by 0.7 percent in the same period, indicating sustained domestic demand along with the gradual resumption of economic activities,” it said.

The report revealed that the reversal from deflation in the previous year was due to higher pump prices of RON97, RON95 and diesel following escalating global crude oil prices, albeit lower electricity charges owing to the bill discounts given under the stimulus package.

Thus, MoF added, inflation is expected to register at 2.4 percent for the rest of 2021.

- Bernama