KUALA LUMPUR, Aug 15 — AmBank Research expects targeted fuel subsidies will keep price pressure subdued in 2019, with headline inflation to grow between 0.5 per cent and 1.0 per cent this year.
In a note, the research house said it expects inflation to remain soft in the coming months with overall sentiments continuing to remain weak, considering the moderate growth of 1.4 per cent year-on-year in July 2019 inflation compared with 1.5 per cent in June 2019.
“The July inflation data continues to support our view that the current pace of economic activity remains insufficient to lift price pressures.
“A potential rise in inflation will be due to the low base impact arising from the tax-holiday period in 2018,” it said.
Echoing the same sentiment, AllianceDBS Research maintained its 2019 inflation forecast at 0.8 per cent year-on-year due to weaker-than-expected inflationary pressures in the first half of this year, coupled with initiatives by the government to deal with the rising cost of living.
The research house said rising cost of living remains an issue to be addressed by the government, particularly among lower income households which tend to spend a greater proportion of their incomes on essential items such as food and housing.
AllianceDBS Research said for the January to July 2019 period, Food & Non-Alcoholic Beverages expanded by 1.4 per cent year-on-year while Housing & Utilities grew by 2.0 per cent year-on-year on average. — Bernama