Inflation mainly driven by additional pressure from the switch to targeted fuel subsidies, continued spillover effects from the reintroduction of the Sales and Service Tax and low-base effects during the three-month zero-rated Goods and Services Tax period.
KUALA LUMPUR: Malaysia’s 2019 headline inflation is projected to rise to 2.7%, mainly driven by additional pressure from the switch to targeted fuel subsidies, continued spillover effects from the reintroduction of the Sales and Service Tax and low-base effects during the three-month zero-rated Goods and Services Tax period.
RAM Rating Services Bhd said the inflation projection for 2019 would still depend on the implementation of the targeted fuel-subsidy mechanism in the second quarter next year as key details of its implementation, such as the disbursement mechanism, were still scant. The credit rating agency said another key risk to its forecast was the volatility of global crude oil prices as the pace of inflation in 2019 would largely depend on how effective the Organisation of the Petroleum Exporting Countries-led supply cuts would be vis-a-vis supporting global crude oil prices.
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