KUALA LUMPUR (Dec 4): AmBank Group Research projects Malaysia’s headline consumer price index (CPI) for 2017 to hover around 4% with the Producer Price Index (PPI) at 6.8%– 7.0%.

In a report today, AmBank group chief economist and head of research Anthony Dass said the PPI continued to grow at single digit for the eighth straight month and at a slower pace for the fourth straight month with a gain of 4.7% year-on-year in October due to slower increases reported by intermediate materials, finished materials, electricity and gas as well as the drop in the cost of water supply.

“We expect the cost of doing business to remain fairly favourable, supported by a stronger USD/ringgit and stable commodity prices that should help contain imported inflationary pressures.

“On the whole, we project the headline CPI for 2017 to hover around 4% with the PPI at 6.8%– 7.0%.

“While the overnight policy rate for 2017 is expected to stay at 3.00% in 2017, we maintain our 25 basis points (bps) rate hike in 1H2018 and a probable 25bps rate hike in 2H2018 pending the pace of the economic growth, the magnitude of demand-pull inflation as well as the strength of the USD/ringgit,” he said.