Malaysian Inflation Expected to Stay Within 2.5%-3% Range in 2024

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Kenanga Research has suggested that further enhancements in the supply chain and a reduction in global demand could contribute to keeping inflation in Malaysia within the 2.5%-3% range in the upcoming year.

In a recent statement, the research firm pointed out that, despite the anticipation of a slowdown in global growth in 2024, Malaysia’s gross domestic product is projected to continue expanding, potentially achieving a year-on-year growth rate of over 4%.

“With domestic inflation expected to remain comfortably below the 3% threshold on average, we do not foresee any inclination for rate cuts on the agenda of Bank Negara Malaysia (BNM).”


“Consequently, BNM is likely to maintain the status quo, keeping the overnight policy rate at 3% throughout 2024,” the statement noted.

However, Kenanga Research does anticipate Malaysia’s headline inflation to maintain a month-on-month growth rate of 0.1%-0.2%, driven by the potential resurgence of food prices due to the looming possibility of a stronger El Nino weather phenomenon in 2024.

“This, along with other external factors such as escalating geopolitical tensions, poses an additional risk of pushing prices higher.”

“On the domestic front, the combination of the government’s subsidy rationalization plan, an increase in services tax, and the implementation of the progressive wage model are expected to increase Malaysia’s inflationary pressures,” it added.

Last Friday, the statistics department revealed that the country’s November headline inflation had slowed to 1.5% year-on-year (October: 1.8%), marking a 33-month low and falling below both Kenanga Research’s and the market’s estimates of 1.7%, primarily due to lower-than-expected food prices.

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