Friday 29 Mar 2024
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KUALA LUMPUR (May 21): Malaysia’s headline inflation, measured by the consumer price index, is expected to come in higher at 1.6% in April, from 1.3% in March, in line with the consensus estimates, said economist at Singapore-based DBS Bank Ltd.

“Pre-election spending and a general improvement in overall economic conditions and employment prospects are likely to lift price pressure. Besides, oil prices are rising, which will push domestic pump prices higher,” DBS economist Irvin Seah said in a note to clients today.

“The only mitigating factor is that the goods and services tax (GST) will be removed from June onwards, which could see a one-off dip in inflation,” Seah added, referring to the recent announcement by the Finance Ministry, which had said that the rate of the highly unpopular GST will be reduced to 0% starting from June 1, from 6% currently.

Beyond the one-off impact from the GST, DBS reckoned that inflation will likely rise gradually towards the end of the year.

In the first quarter of 2018 (1Q18), Malaysia’s inflation declined to 1.8%, from 3.5% in 4Q17, which reflected the smaller contribution of domestic fuel prices to headline inflation, according to data from Bank Negara Malaysia (BNM).

This year, BNM forecast the country’s inflation, which is mostly contingent on crude oil prices and exchange rates, to come in between 2% and 3%, from 3.7% in 2017.

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