KUALA LUMPUR (Aug 17): The reintroduction of the sales and services tax (SST) on Sept 1 is not expected to have a significant impact on inflation as seen by the introduction of the goods and services tax (GST) back in April 2015, Bank Negara Malaysia says.

"The impact from SST on inflation will be much smaller as compared with when GST was introduced. It would, however, depend on the pricing behaviour as to how traders will pass on the SST cost," its Governor Datuk Nor Shamsiah Mohd Yunus told a news conference here today.

However, the impact is unlikely to be as significant as when the GST was introduced due to the much smaller composition of products under the SST compared with the GST.

The Malaysian second-quarter (2Q) 2018 headline inflation declined to 1.3% from 1.8% in 1Q, reflecting the zerorisation of the GST rate.

However, this was offset by higher transport inflation.

Nor Shamsiah expects the headline inflation to moderate in the remaining of 2018 and underlying inflation to remain stable.

She added that the fixing of RON95 fuel price since March 22 has helped to contain further increase in fuel inflation during 2Q.