Headline inflation eased to six-month low of 3.8% in December

Estimate Reading Time: 3 minutes

KUALA LUMPUR (Jan 20): Inflation, as measured by the consumer price index, eased to a six-month low of 3.8% in December 2022 as compared to 4.0% in November, the Department of Statistics Malaysia (DOSM) said on Friday (Jan 20).


This brought the full-year inflation rate to an average of 3.3% compared to 2.5% in 2021.

Malaysia’s chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the December inflation was pulled down by slower food, transport, recreation services and culture, and personal care price inflation.

“The slower increase in the food and non-alcoholic beverages group of 6.8% versus the previous month of 7.3% has contributed to the lower increase in national inflation.

“This was followed by transport (4.9%) and furnishings, household equipment and routine household maintenance (3.7%) which also recorded a slower increase as compared to November 2022,” he said in a statement on Friday.

He added the slowdown in those groups helped to offset the persistent rise in restaurants and hotels price inflation and an uptick in housing, utilities and other fuels price inflation.

“Restaurants and hotels continued to show an increase of 7.4% as against November 2022 (7.0%),” said Mohd Uzir.

“Malaysia’s inflation was also driven by the increase in recreation services and culture (2.4%), miscellaneous goods and services (2.3%) and housing, water, electricity, gas and other fuels (1.5%),” he added.

Similarly, education also registered an increase of 1.4%, and health recorded a 1.3% rise.

Alcoholic beverages and tobacco posted a marginal increase of 0.7% while clothing and footwear inched up 0.4%.

Inflation for the year 2022 at 3.3% versus 2021’s 2.5% was mainly attributed by food and non-alcoholic beverages (5.8%), restaurants and hotels (5.0%) and transport (4.7%).

“The conflict between Russia and Ukraine and the global food price increases in 2022 attributed to the increase in the inflation for this year,” Mohd Uzir added.


Inflation for the fourth quarter of 2022 accelerated 3.9% to 128.9 against 124.1 in the same quarter of the preceding year.

On a quarterly basis, inflation increased 0.6% as compared to the third quarter of 2022.

Monthly headline inflation in December 2022 increased moderately to 0.2% as compared to 0.3% in November 2022 which was mainly contributed by the restaurants and hotels (0.7%) and food and non-alcoholic beverages (0.5%).

Core inflation decelerates for first time in 15 months
Core inflation, which measures changes in the prices of all goods and services without taking into account the volatile prices of fresh food as well as administered prices of goods by the government, registered an increase of 4.1% in December 2022, compared to a year ago.

UOB Bank’s senior economist Julia Goh noted that this is the first time in 15 months core inflation decelerated, tentatively suggesting that it has peaked at 4.2% in November.

The highest increase was recorded by the food and non-alcoholic beverages group at 8.1%. In addition, the restaurants and hotels group recorded an increase of 7.4%, followed by transport (7.3%), furnishings, household equipment and routine household maintenance (3.7%), and recreation services and culture (2.4%), according to the DOSM.

“Nevertheless, December’s core inflation continued to stay above the headline inflation for the third month in a row and surpassed its 2016-2021 long-term average level of 1.4% for the 12th straight month,” said Goh in a note on Friday.

For the full year of 2022, core inflation averaged 3.0% against 0.7% in 2021, hitting the upper bound of Bank Negara Malaysia (BNM)’s forecast range of 2.0% to 3.0%.

Meanwhile, services inflation remained high at 4.4% in December, the highest level since October 2008, Goh added. It also exceeded its 2016-2021 long-term average of 1.9% for the eighth consecutive month. “All these continue to presage strong demand price pressures,” she says.

Goh said that although BNM unexpectedly took a prudent pause on its interest rate hike on Thursday (Jan 19), the central bank guided that its is not done with the interest rate hikes yet and future rate move remains data dependent.

“In our view, recent global developments and country-specific factors suggest rising challenges for Bank Negara to hike further in the near term. Hence, we have dialled down our expectation to just one more 25bps hike to bring the overnight policy rate (OPR) back to pre-pandemic level of 3.00% by mid-2023, before taking a long pause for the rest of the year,” she added.-The Edge Markets

Notice: ob_end_flush(): failed to send buffer of zlib output compression (0) in /home/capitalp/public_html/wp-includes/functions.php on line 5309