PETALING JAYA: The government’s move to reduce the subsidised RON95 quota from 300 litres to 200 litres per month represents a gradual step towards subsidy rationalisation, with limited but notable macroeconomic implications, say analysts.
As the adjustment only affects fuel consumption above the 200 litre threshold, TA Research in a report said the overall impact on inflation is expected to remain manageable.
“Based on our estimates, the effective increase in fuel prices is likely to be partially diluted, resulting in a modest consumer price index impact.
“On the demand side, the policy may lead to a mild moderation in private consumption, particularly among higher-usage households, as part of their disposable income is redirected towards higher fuel costs,” it added.
Nevertheless, the research house said the broader impact on overall economic growth is expected to be limited.
