AmResearch Sdn Bhd maintains its inflation forecast at two percent for this year.

However, its forecast for next year is moderately higher at 2.5 percent along with rises in food and commodity prices and private consumption.

Investments are expected to increase due to favourable employment situation and accommodative financing environment in Malaysia, it said in a research note.

In that respect, AmResearch said the subdued inflation outlook ensures more room for the central bank to maintain the relatively accommodative monetary policy by keeping the overnight policy rate at 2.75 percent well into the first half of next year.

"In the second half of next year, we may see rates rising by 50 basis points as global economic growth picks up," it said.

The Statistics Department said the Consumer Price Index (CPI) for October increased two percent to 114.7 from 112.5 in the same month last year.

- Bernama