Inflation to remain moderate in 2022 – BNM

 

Bank Negara Malaysia (BNM) expects inflation to remain moderate in 2022, closer to its long-term average, while core inflation is likely to remain modest this year.

BNM Governor Shamsiah Mohd Yunus said the central bank would remain vigilant concerning the ongoing developments in demand and cost pressures and would continue to actively engage with industry players to examine price dynamics closely as economic conditions improve.

“We expect household spending to continue to support growth this year. The easing of containment measures and improving the job market as well as income conditions are factors that will lift consumption activity.

"However, developments surrounding the pandemic - particularly if the utilisation of healthcare capacity comes under stress - and price pressures from supply constraints may weigh on sentiments and actual spending," she told reporters after announcing Malaysia's economic growth for the fourth quarter of 2021, held virtually today.

For 2021, the average headline inflation stood at 2.5 percent against -1.2 percent in 2020, while core inflation averaged at 0.7 per cent versus 1.1 per cent in 2020.

Nor Shamsiah brushed aside concerns about Malaysia entering the hyperinflation phase, saying that it was highly unlikely that the 1974-style stagflation would occur.

“If we look back in the last 30 years, the highest inflation rate that we have seen is about 8.5 percent in July-August 2008 when oil prices doubled to nearly US$150 per barrel from US$74 per barrel the year before,” she noted.

- Bernama