Malaysia CPI rises to 2.9 pct, higher than consensus - JPMorgan

Core prices, which exclude the most volatile fresh food items and administered prices of goods and services remained flat for the fourth consecutive month, leaving core CPI inflation at 0.7 per cent over-a-year ago (oya).

"The uptick in October prices is mainly energy-related, broad price pressures remain benign. Headline CPI inflation expanded 0.2 per cent over three months in a seasonally adjusted annual rate.

"Energy-related prices drove the bulk of October's expansion with utility and transport costs up 2.6 per cent month-on-month (m-o-m) and 0.2 per cent (m-o-m)," it said in a note today.

The rise in utility costs was expected due to the expiration of electricity bill subsidies for households under the PEMULIH package which ended in September, while the remaining categories recorded modest price gains last month.

The investment bank also noted that monetary policy normalisation is likely to begin in the third quarter of 2022.

"As Malaysia continues to move toward endemic equilibrium, mobility restrictions have been broadly eased, paving the way for recovery in the non-manufacturing sector over the coming quarters.

"Looking ahead, we expect labour conditions outside the goods-producing sectors to catch up next year alongside the broader resumption in services, in turn guiding core prices higher, albeit at a gradual pace. Thus, we continue to expect monetary policy tightening of 25 basis point each in the third quarter of 2022 and the fourth quarter of 2022," it said.