Malaysia’s food inflation pressure to remain elevated in 2HCY2023 – MIDF Research

Inve$t | Market Sentiments | 1 September 2023

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According to MIDF Research, food inflation pressure in Malaysia is expected to remain elevated in the second half of calendar year 2023 as the country, being a net food importer, will be affected negatively amid climate change impacts and external developments on food export policies.

Malaysia’s producer price index (PPI) declined 2.3% in July 2023 (June: -4.8%), citing the Department of Statistics Malaysia. Malaysia’s producer prices deflated for the sixth consecutive month in July 2023, declining by 2.3% y-o-y. The contraction continued as manufacturing input prices deflated by 2.1% y-o-y, the steepest in three months.

Goods-producing prices for the manufacture of food and the manufacture of coke and refined petroleum were among the key downward factors. Meanwhile, the production cost for agriculture, forestry and fishing ended one year of contractionary sequence, expanded by 3.6% y-o-y (June 2023: -20.4% y-o-y).

The electricity and gas prices rose at the softest pace in three months at 0.1% y-o-y while inflation for water supply eased to 3.1% y-o-y (June 2023: +3.2% y-o-y). By the processing stage, prices for crude materials dropped by 6.3% y-o-y (June 2023: -18.7% y-o-y), attributable to the decline in prices of non-food materials.

Given the high base effect of commodity prices, the producer’s output deflation was within expectations. The contractionary trend of the PPI indicated further moderation in overall inflationary pressure. However, it is worth to monitor the persistent increase in food price pressure.

Malaysia to launch hydrogen roadmap this year as it seeks hydrogen investments – Nik Nazmi

According to the Minister of Natural Resources, Environment and Climate Change Nik Nazmi Nik Ahmad, it would be remiss not to mention green hydrogen’s potential as a fuel alternative. Hence Malaysia’s upcoming Hydrogen Economy and Technology Roadmap will underline ways for the nation to attract investments to produce this new commodity to become a main green hydrogen export hub by 2027.

The federal government, in collaboration with state governments and utilities like TNB, is excited to explore the prospect of harnessing a new energy carrier and the knock-on economic effects it would bring. The aim is to unlock the hydrogen economy through the NETR (National Energy Transition Roadmap) and the Hydrogen Economy and Technology Roadmap (HETR), targeted to be rolled out later this year. He was speaking at the launch of the Energy Transition Conference 2023.

Malaysia, a key producer of natural gas, has been exploring hydrogen as a new resource considering rising demand for green energy. This is due to its gas-like nature, which means it can be stored and transported, unlike other existing raw RE such as solar, hydro and wind. While hydrogen itself does not emit carbon when consumed as a fuel source, production of the molecules using green energy has been very expensive — said to cost at least US$250 (RM1,164) per barrel of oil equivalent, as opposed to the selling price of crude oil of about US$70-per-barrel range at present.

Proponents of hydrogen include national oil and gas company Petronas as well as the Sarawak state government, which intends to utilise its vast hydro electricity generation capacity to support green hydrogen production. The state has also tested its first hydrogen-powered autonomous rapid transit tram this month. National utility outfit TNB is also looking at hydrogen, in a bid to explore hydrogen-fired gas plants.

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