PETALING JAYA: Soaring food prices and energy costs may continue to drive inflationary pressure this year.

       Several research houses estimated that the country’s inflation, which is measured by the consumer price index (CPI), could increase between 2.1% and 3%.

       Kenanga Research expected the CPI to increase by 2.4% this year: slightly lower than the 2.5% recorded in 2021, mainly due to the “high base effect”.

       “Despite the expectations that supply chain disruptions may gradually ease in the second half of 2022, we may continue to see a rise in food and energy prices due to rising consumer demand as the economy continues to recover from Covid-19. The continuation of China’s zero-Covid-19 policy and a potential new wave of the pandemic may add pressure on prices,” it said in a report yesterday.

       Last Friday, the Statistics Department reported that the country’s CPI had increased by 3.2% year-on-year in December 2021, led by the rise in food and fuel prices. The increase surpassed the average inflation for the period from 2011 to 2021 of about 1.9%.

       Chief statistician Datuk Seri Mohd Uzir Mahidin said heavy rains which occurred in several states throughout December 2021 had led to the increase in food prices, especially vegetables, fish and seafood, attributable to a direct effect of supply shortages due to the weather factor.

       This brought an overall 2.5% increase in the country’s annual inflation rate in 2021, compared with 1.25% decline in 2020.

       Maybank Investment Bank said there were signs that food prices would remain elevated in the near term due to the lingering impact of the recent weather condition.

       The research house added the upside risk factors to inflation include sustained upward pressures on energy and commodity prices, as well as prolonged global supply chain bottlenecks and foreign workers shortages.

       “With macroeconomic policy focused on supporting economic growth this year, after the underwhelming recovery last year from the pandemic-triggered recession in 2020, we maintain our outlook of overnight policy rate staying at current 1.75% level for much of this year before a 25 basis points hike in the fourth quarter,” it said.

       UOB Global Economics and Market Research expected the country’s inflation rate to be higher at 3% this year amid upside risks coming from prolonged global supply chain bottlenecks, post-pandemic labour shortages, volatile commodity prices, expiry of government’s price control schemes, and potential subsidy rationalisation programmes.