Malaysia's June inflation rate seen easing after GST scrapped

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KUALA LUMPUR (July 16): Malaysia's annual inflation rate likely eased to 1.3% in June from 1.8% the previous month, thanks to the withdrawal of a goods and services tax (GST), a Reuters poll showed.

The 10 analysts in the Reuters poll gave estimates for June inflation ranging from 0.6% to 1.9%.

The new government led by Prime Minister Tun Dr Mahathir Mohamad, put in office after the May 9 general election, scrapped the 6% consumption tax on June 1. It had been in effect for three years.

Economists said the removal of GST likely dampened inflation in June, despite higher transport and food prices during the Muslim fasting month of Ramadan and subsequent Eid al-Fitr celebrations.

Amid slowing inflation and steady growth, Malaysia's central bank left its key interest rate unchanged at 3.25% at a policy meeting on July 11.