KUALA LUMPUR, Aug 29 (Bernama) — The government’s intervention through subsidies and price control has helped to rein in inflation in Malaysia wherein the country could have registered a higher inflation rate than the 4.4 per cent headline inflation in July, economic experts said.

Deputy vice chancellor of research and graduate studies at i-CATS University College Professor Datuk Dr Shazali Abu Mansor said many essential items listed in the Consumer Price Index (CPI) basket such as chicken, eggs, sugar, rice (selected types) and cooking oil are either subsidised or controlled items via price ceiling measure.

“Most of the daily necessities are controlled goods such as rice and sugar. Intervention by the government greatly helps in reducing our inflation, which keeps it under control,” he told Bernama.

Earlier, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed announced that Malaysia’s CPI increased by 4.4 per cent year-on-year to 127.9 in July 2022 compared to 122.5 in the same month of the preceding year.

Meanwhile, economist Manokaran Mottain said the 2.8 per cent aggregate inflation year-to-date came in within Bank Negara Malaysia’s forecast level.

On a monthly basis, inflation increased 0.4 per cent in July 2022 as compared with June 2022.

Compared with other ASEAN countries such as Indonesia with inflation at (+4.9 per cent), the Philippines (+6.4 per cent), Singapore (+7.0) and Thailand (+7.6 per cent), Malaysia’s inflation is considered low.

“The real inflation number is not reflective of the current situation because a lot of items in the CPI basket are controlled items and subsidised items. Overall, we can still take comfort.

“However, these interventions by the government with subsidies and price controls have helped us to have a lower increment in inflation,” he said.

Manokaran pointed that rice, bread and other cereal category have increased by 5.5 per cent in July compared with 4.2 per cent in June, whereby a tighter intervention by the government is required to make staple foods cheaper and affordable for the people.

“Perhaps the government should sit together with the major supermarkets and hypermarkets to persuade them to have their own brands at reduced prices.

“At the moment, I think they do have this but it needed to be expanded to a wider scope, especially those items bought by the B4 community,” he explained.

On inflation outlook for the second half of 2022, MIDF Amanah Investment Bank Bhd believes the moderate downward trend in global commodities prices might ease Malaysia’s food inflation pressure.

For example, Malaysia’s crude palm oil price, among others, has moderated from above RM6,000 per tonne in early June 2022 to below RM4,000 in July 2022, it said.

The investment bank has kept its average CPI forecast unchanged at +2.8 per cent for 2022.

Source: BERNAMA News Agency