RAM Rating projects Malaysia’s July’s inflation at 1.6pc

Vegetable sellers setting up their stall at the market Puchong Jaya Market, Kuala Lumpur, January 26, 2014.  — Picture by Saw Siow Feng
Vegetable sellers setting up their stall at the market Puchong Jaya Market, Kuala Lumpur, January 26, 2014. — Picture by Saw Siow Feng

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KUALA LUMPUR, Aug 13 — RAM Ratings expects Malaysia’s overall inflation rate for July to be marginally higher at 1.6 per cent, underpinned by an anticipated uptick in food inflation.

Head of Research Kristina Fong said the overall inflation stayed benign at 0.2 per cent in the first half of 2019 (1H 2019), mainly due to a lower transport fuel price ceiling (instituted in January 2019) as well as the broad-based fall in prices following the removal of the Goods and Services Tax (GST) in June 2018.

“That said, we generally expect the 2H 2019 headline inflation to trend higher than 1H 2019, largely due to the low-base effect from the withdrawal of the GST last year, as well as the anticipated implementation of the targeted fuel subsidy mechanism later this year,” she said in a note today.

Fong said the low-base effect from the GST’s withdrawal last year had already caused inflation rate to surge to 1.5 per cent in June 2019 compared with 0.2 per cent in May 2019, and the higher trend may prevail for some time.

“Overall inflation is expected to experience another round of acceleration once the targeted fuel subsidy is in place, which would raise consumer fuel prices to market levels.

“Based on our estimates, the implementation of the scheme will lift 2019’s overall inflation by 0.2 percentage points relative to the current blanket subsidy mechanism,” she added.

The research house anticipated the full-year inflation to come in at 1.0 per cent, unchanged from the full-year average charted in 2018. — Bernama

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