KUALA LUMPUR: Malaysia's headline and core inflation may trend lower within expectations in the second half of 2023 (2H 2023), partly due to the higher base in the corresponding period last year.
Bank Negara Malaysia governor Datuk Shaik Abdul Rasheed Abdul Ghaffour said the risks to inflation stem mainly from global developments.
Abdul Rasheed said headline inflation is expected to average close to the lower bound of the earlier forecast range of 2.8-3.8 per cent.
"While cost pressures have eased, core inflation will remain at elevated levels as demand conditions remain rather firm. The balance of risk to inflation is mostly tied to global developments," he said at a press conference today.
In line with the easing cost environment, Abdul Rasheed said headline inflation continued to trend lower in the second quarter (Q2), averaging 2.8 per cent for the quarter from 3.6 per cent in Q1 2023.
He said much of the downtrend was driven by lower core inflation, which contributed around half of the decline during the second quarter.
"While core inflation moderated to 3.4 per cent during the quarter from 3.9 per cent in Q1 2022, it remains elevated relative to the historical average of around 2.0 per cent, therefore the need to remain vigilant.
"The lower core inflation was mainly due to lower inflation for food away from home and communication services," he added.