KUALA LUMPUR: MIDF Amanah Investment Bank Bhd has maintained its headline inflation forecast to average at 2.1 per cent this year.
In a note today, it said that the projection is based on the view that the global supply chain constraint is expected to ease and commodity prices to normalise by the middle of 2022.
“On top of that, tightening monetary policy is likely to take place next year with recovery in domestic demand and labour market continuing smoothly.
“If inflation were to spike, we believe the government has enough fiscal policy space to contain inflation, among others, via its subsidy approaches,” said MIDF.
Earlier, the Department of Statistics Malaysia (DOSM) announced the Consumer Price Index (CPI) in December 2021 increased 3.2 per cent to 124.5 from 120.6 in the same month of the preceding year.
DOSM attributed the increase to the rise in food and fuel prices.
Meanwhile, MIDF expects the recently reduced pressure on production costs would consequently lower the pressure on general consumer prices in the coming months along with the fading low-base effects.
However, COVID-19 outbreaks in many economies pose a downside risk to the ongoing supply constraints, it added. - Bernama
