KUALA LUMPUR, March 27 (Bernama) -- CGS-CIMB Research is maintaining its inflation forecast for 2023 at 3.0 per cent year-on-year (y-o-y), softer relative to 2022’s consumer price index (CPI) inflation of 3.3 per cent y-o-y.

The brokerage said further food price hikes are expected in the coming months due to Ramadan and Hari Raya holidays, during which food demand is set to soar.

“Owing to this, to cap potential price hikes, the government recently launched Jualan Rahmah, an initiative under Payung Rahmah, running from March 23 to April 22, 2023, that offers a 40 per cent discount on over 150 basic necessities.

“The government also plans to announce a holiday period price control scheme, similar to what had been launched in previous festive seasons,” it said in a research note today.

Recently, the Department of Statistics Malaysia announced that the CPI in February rose 0.2 per cent month-on-month (m-o-m) and 3.7 per cent y-o-y, which were higher than CGS-CIMB’s and Bloomberg's expectations.

Meanwhile, the core CPI gained 0.2 per cent m-o-m, lifting y-o-y growth to 3.9 per cent. It was driven by gains in the food and energy components, and cushioned by softening in the transport component.

CGS-CIMB Research said although electricity hikes to non-domestic users do not directly affect the CPI, there are indirect impacts through higher producer costs which may be passed on to consumers.

It noted that so far, the latest Producer Price Index for January 2023 has been still mild, trailing lower at 1.3 per cent y-o-y from 3.5 per cent y-o-y in December 2022. 

-- BERNAMA