Economists see slight
rise in Malaysia inflation rate
KUALA LUMPUR: The
inflation rate in Malaysia remained stable in 2012 but it is expected to edge
up in 2013, said economists.
They have projected the Consumer Price Index, which is the official barometer to measure the inflation rate, to grow by an average 1.38 per cent for December.
The Statistics Department will release the details today.
TA Research economist Patricia Oh said the modest inflation for the year has been supported by the government's subsidies on essential goods.
They have projected the Consumer Price Index, which is the official barometer to measure the inflation rate, to grow by an average 1.38 per cent for December.
The Statistics Department will release the details today.
TA Research economist Patricia Oh said the modest inflation for the year has been supported by the government's subsidies on essential goods.
For the month of December 2012, the petrol subsidy for
RON95 was RM0.74 per litre based on the pump price of RM1.90 per litre.
"Going forward, we do expect the reduction in subsidies in tandem with the government's reformation and transformation plans."
The government has proposed to reduce its overall spending on subsidies during 2013 as part of its initiative to lower the budget shortfall and the budget allocation for subsidy bills has been reduced to RM37.6 billion (or -11.3 per cent year-on-year) this year.
"While prices of goods will surge accordingly and inflation could rise in 2013, nonetheless, this will be compensated by the improved fiscal credibility in the long run."
OCBC Bank also thinks that inflation should return to about three per cent in 2013 (from below two per cent in 2012), a level that is more in sync with Malaysia's medium-term inflation trend.
Meanwhile, UOB Bank economist Ho Woei Chen expects inflation to rise to an average of 2.5 per cent in 2013 on the back of some recovery in the global outlook.
Higher wages and consumption demand will put upward pressure on the prices, she added.
DBS Bank economist Irvin Seah warned that the December's figure will mark the turn in inflation for Malaysia.
"Expect a broad-based gradual increase in inflation readings in the coming months as the effect of strong domestic demand, rising property prices and wage costs start to dig in."
Although DBS Bank expects Bank Negara Malaysia to hold the overnight policy rate steady at 3.00 per cent right through the year, the risk of a rate hike to anchor inflation expectation is rising.
"Going forward, we do expect the reduction in subsidies in tandem with the government's reformation and transformation plans."
The government has proposed to reduce its overall spending on subsidies during 2013 as part of its initiative to lower the budget shortfall and the budget allocation for subsidy bills has been reduced to RM37.6 billion (or -11.3 per cent year-on-year) this year.
"While prices of goods will surge accordingly and inflation could rise in 2013, nonetheless, this will be compensated by the improved fiscal credibility in the long run."
OCBC Bank also thinks that inflation should return to about three per cent in 2013 (from below two per cent in 2012), a level that is more in sync with Malaysia's medium-term inflation trend.
Meanwhile, UOB Bank economist Ho Woei Chen expects inflation to rise to an average of 2.5 per cent in 2013 on the back of some recovery in the global outlook.
Higher wages and consumption demand will put upward pressure on the prices, she added.
DBS Bank economist Irvin Seah warned that the December's figure will mark the turn in inflation for Malaysia.
"Expect a broad-based gradual increase in inflation readings in the coming months as the effect of strong domestic demand, rising property prices and wage costs start to dig in."
Although DBS Bank expects Bank Negara Malaysia to hold the overnight policy rate steady at 3.00 per cent right through the year, the risk of a rate hike to anchor inflation expectation is rising.
Source: New Straits Times
Date : 23 January 2013
Afternoon Highlight (23/01/13/15/713)
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