Inflation rate in 2024 to range between 2.1 and 3.6 per cent

KUALA LUMPUR - The country’s inflation rate is forecast to range between 2.1 per cent and 3.6 per cent in 2024.

The Finance Ministry (MoF) said this is partly due to a gradual shift towards a targeted subsidy mechanism to ensure a more equitable distribution of resources.

"Additionally, potential risks to the inflation outlook remain subject to the fluctuations in exchange rates and supply-related factors such as global commodity prices, geopolitical uncertainties and climatic conditions,” the ministry said in its Economic Outlook 2024 report released today.

The MoF said for this year, inflation is estimated to be in the range of 2.5 per cent to 3.0 per cent.

"The Consumer Price Index (CPI) grew by 2.8 per cent from January to August 2023, attributed to moderating trend in global commodity prices, easing supply-related disruptions, existing price controls and provision of subsidies for selected items, as well as the lagged impact from the normalisation of the Overnight Policy Rate.

"Inflation is expected to moderate in the remaining months, while core inflation is expected to remain elevated relative to the long-term average,” it said.

On wholesale prices, the MoF said the Producer Price Index (PPI) is expected to be higher in 2024 at 0.1 per cent to 2.1 per cent in tandem with diminishing base effect and better production activities.

The PPI for local production decreased by 2.4 per cent during the first eight months of 2023, attributed to moderate global commodity prices, particularly crude oil.

"Within specific sectors, the contraction in PPI was predominantly driven by a significant decrease in agriculture, forestry and fishing (19.4 per cent) as well as mining (8.4 per cent) sectors.

"The PPI is expected to contract between 2.5 per cent and 0.5 per cent in 2023, given the lower global input cost,” it said. - BERNAMA