KUALA LUMPUR, Dec 3 — Maybank Investment Bank (IB) Bhd revised today its 2014 inflation rate outlook for Malaysia to between 3.3 and 3.7 per cent, up from 3 to 3.5 per cent previously, after the electricity tariff hike announced yesterday.

The research house also predicted that there will be another fuel pump price hike next year, although it was uncertain of the exact timing and amount of increase.

“The timing and quantum of the fuel price increase remains a question, hence our range forecast for 2014 inflation rate, which assumes another 20 sen per litre hike either early or middle of next year,” Maybank IB said in its daily report.

Its revision was based on electricity rates which make up 2.9 per cent of the Consumer Price Index (CPI), and the weighted total average tariff hike to estimate both the direct impact through households’ bills, and the potential pass-through impact from commercial and industrial users.

The latest statistics from the Energy Commission showed that Peninsula Malaysia makes up 91.6 per cent of electricity sales in the country, while Sabah makes up 3.4 per cent and Sarawak 5 per cent.

In a separate report, Maybank IB changed its call from “HOLD” to “BUY” the shares of local utility provider Tenaga Nasional Bhd (TNB) following the tariff hike, as it believes the firm will now increase its net profit by 12 per cent in 2014, 21 per cent in 2015, and 16 per cent in 2016.

“We have previously expressed our concern about TNB potentially being incrementally less profitable under the new tariff framework. The official announcement proved otherwise, and we are no longer cautious,” the research house said.

Starting next year, the electricity tariff in the peninsula will increase by 14.9 per cent or 4.99 sen to 38.53 sen for every kilowatt per hour (kWh), and 5 sen for Sabah and Labuan.

Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili, who made the announcement yesterday, did not discount the possibility of further increases next year.

Malaysia has embarked on a series of subsidy cuts, starting with raising the pump price of RON95 petrol and diesel by RM0.20 per litre starting from September 3, to RM2.10 and RM2.00 per litre respectively.

The subsidy cut was announced by Putrajaya following global ratings agency Fitch which revised Malaysia’s sovereign debt outlook from “Stable” to “Negative” in July.

In Budget 2014, Putrajaya also said it would stop subsidising sugar by the current 34 sen per kg, in a move that may cause cascading price hikes.

A World Bank economist had also predicted in October that there is bound to be at least one more fuel subsidy cut in 2014, in order for Malaysia to achieve its subsidy rationalisation numbers.

Speaking to a post-Budget 2014 dialogue, Dr Frederico Gil Sander criticised Putrajaya for not communicating its timeframe for subsidy cuts to consumers and investors, which has caused anxiety against Malaysia.

In September, Maybank IB had predicted further subsidy rollbacks since the total savings from the Performance Management and Delivery Unit’s Subsidy Rationalisation Roadmap in 2010 has been much less than intended.

Launched in May 2010, the roadmap detailed a five-year period of subsidy rationalisation to save RM103 billion by cutting subsidies mostly for fuel (petrol, diesel, liquefied petroleum gas), gas, electricity, toll roads, and food (sugar, flour, cooking oil).

A report by Bank Negara Malaysia last month showed that the average inflation rate for the third quarter of this year had increased to 2.2 per cent, the highest since the fourth quarter of last year, due to higher inflation in transport and food.

This came after inflation rose to 2.6 per cent in September, the highest yet in 2013, after the fuel pump price hike.