KUALA LUMPUR: Malaysia’s headline inflation is expected to moderate to around 2.5 per cent in 2024, reflecting stable cost and demand conditions, according to the World Bank,
However, this is subject to potential changes in government subsidies and price control measures, it said in its April 2024 East Asia and Pacific Economic Update.
“Core inflation will also likely trend lower in 2024, and poverty is expected to decline further,” it noted.
The World Bank highlighted that in January 2024, Malaysia’s inflation stood at 1.5 per cent, while core inflation also moderated to 1.8 per cent.
“Bank Negara Malaysia kept its overnight policy rate at 3.0 per cent in March and the monetary policy is deemed supportive of the economy.
“The central bank also expects inflation to remain modest as cost and demand conditions stabilise. However, despite the moderating inflation, lower-income households have experienced higher inflation,” it said.
In December 2023, inflation for households earning below RM3,000 per month was 1.7 per cent, which was higher than the headline inflation of 1.5 per cent.
This disproportionally affected this income group due to their higher spending on necessities.
At the same time, the World Bank noted that the government’s target of zero hardcore poverty has been reached in some states.
Nevertheless, it stressed that a broader view and a more ambitious target of poverty eradication beyond the current 0.2 per cent of national hardcore poverty is needed.
The latest official estimates show that absolute poverty in 2022 remained higher than the pre-pandemic level.
It added that income inequality — as measured by the Gini index based on household per capita net income — was at 40.7 in 2021, with different trends observed across states as several saw a widening income gap.
