MIDF Research is anticipating an overall inflation rate of 3.2% this year, assuming the fuel-targeted subsidy will be rolled out by June 2024.
In a statement, OCBC senior Asean economist Lavanya Venkateswaran said the 2.5% forecast implies some pick up in price pressures in the coming months.“Notwithstanding the rise, inflationary pressures will remain manageable. As such, we continue to expect Bank Negara Malaysia to keep its overnight policy rate unchanged at 3% in 2024,” she added.
“Based on our analysis, fuel subsidy rationalisation and the revision in services tax would have a more significant impact on the inflationary trajectory,” it said in its research note.“This includes the effective date of implementation for fuel subsidy rationalisation, the quantum of the prices and tariffs adjustments, and the strength of second-round impacts on household spending and business costs,” it said.
Meanwhile, MIDF Research expects a gradual pick-up in overall prices in the first half of 2024 following an increase in utility charges, implementation of a higher sales and service tax rate at 8% , and the 10% for low-value goods tax.
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