Headline Inflation To Average Between 2.0 Pct And 3.5 Pct In 2024 - Public Investment Bank

KUALA LUMPUR, July 25 (Bernama) -- Headline inflation is projected to average between 2.0 per cent and 3.5 per cent in 2024, while core inflation is anticipated to remain within the 2.0 per cent to 3.0 per cent year-on-year (y-o-y) range, said Public Investment Bank Bhd.

The investment bank said the upside risk to inflation depends on the degree of spillover from additional domestic policy measures on subsidies and price controls, as well as fluctuations in global commodity prices and financial market dynamics.

Malaysia’s headline inflation held steady at 2.0 per cent y-o-y in June, lower than the consensus estimate of 2.2 per cent y-o-y, mainly supported by stronger growth across food and beverages, transport, as well as restaurants and hotels.

Core inflation was also steady at 1.9 per cent y-o-y. 

Meanwhile, Hong Leong Investment Bank (HLIB) expects inflation to rise in the second half of 2024 following the adjustments in diesel subsidies, with further upside risk dependent on the impending RON95 subsidy cut.

Although the higher inflation will be largely cost-push, it said close attention must be paid to any signs of increased demand-pull pressures resulting from income-supportive measures such as the Employees Provident Fund (EPF) Account 3 and civil servant salary hike.

“Nevertheless, given the commendable growth data for the year so far and still-manageable price pressures, we continue to expect Bank Negara Malaysia (BNM) to keep the overnight policy rate (OPR) at 3.00 per cent until the year-end,” HLIB said in a research note today.

HLIB and Public Investment Bank have maintained their forecast that BNM would hold the OPR steady at 3.0 per cent through 2024.

-- BERNAMA