Brent crude futures rose 35 cents to settle at $79.57 a barrel, a 0.44 percent gain. Last week, the global benchmark topped $80 for the first time since November 2014. U.S. West Texas Intermediate (WTI) crude futures fell 11 cents to settle at $72.13 a barrel, a 0.15 percent loss. They earlier touched $72.83 a barrel, the highest since November 2014.
KUALA LUMPUR: AmBank Research expects inflation to rise gradually driven by firmer commodities prices and tighter labour market conditions which should result in firmer wages and better disposable spending by households.
“With our inflation projection between 2% and 2.5%, we expect Bank Negara to normalise its policy rate to 3.50%, most likely in September in which we maintain our 30% chance,” it said on Thursday.
Underpinning the higher inflation, it said was stronger global growth which it projects at 3.6% and that should add some upwards pressure on commodities prices.
However, the research house said better investment in capacity expansion and labour productivity should contain the upside inflationary pressure.
“We project inflation would be around 2.0% – 2.5%, which falls within the Bank Negara range of 2% to 3%,” it said.
AmBank Research said March headline inflation came in lower than both its and consensus expectation.
The 1.3% on-year gain in headline fell below its expectation of 1.0% and consensus of 1.6%.
The March inflation reading was slightly lower than February’s 1.4% on-year. Hence for the 1Q2018, headline inflation averaged at 1.8% on-year compared with 4.1% on-year over the same period in 2017.
March core inflation, (excludes volatile prices like fresh food items, and administered prices of goods and services) rose by 1.7% on-year, marginally lower than February’s reading of 1.8% on-year. This brings the average for 1Q2018 to 1.9% on-year.
The research house said slower inflation was due to: (1) softer gain from food prices which rose by 2.9% on-year in March from 3.0% on-year in February, the lowest since October 2016; (2) a high base; (3) stronger ringgit against the US$, where the currency appreciated 12.1% on-year; and (4) lower retail petrol prices with RON95 down 4.7% on-year in March from -1.7% on-year in February, while RON97 fell 5.6% on-year in March from -2.7% on-year in February, and diesel down 1.8% on-year in March from 3.1% on-year in February.
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