KUALA LUMPUR, May 16 — RAM Ratings expects inflation in Malaysia to moderate to 4.4 per cent in April 2017, compared to the high of 5.1 per cent in March due to the tapering off of the low-base effects from the transport fuel component.
In its inaugural issue of the Economic Insight report today, the rating agency said the transport fuel component had contributed significantly to the run-up in headline inflation, in the first quarter of this year.
RAM Ratings said the sticky uptrend in food and non-alcoholic beverage prices had also added fuel to the upward price pressures this year, driven by the removal of cooking oil subsidies in November 2016, and price growth of fish, seafood, vegetables and food away from home.
“Food away from home inflation remains the greatest driver of overall food and non-alcoholic beverage component price increases, given its heavy weight of 36.8 per cent in this consumer price index (CPI) category,” it added.
RAM Ratings, which has maintained its annual CPI forecast at 3.0 per cent, however, acknowledged the upward pressure on its base forecast, mainly from fuel price trends.
“The factors that we will be closely monitoring include the effectiveness of the anticipated extension of the Organisation of the Petroleum Exporting Countries’ oil production cut, the speed and sustainability of a ramp-up in shale production, and potential supply-side shocks emanating from an escalation in geopolitical risks,” it said. — Bernama
Source: The Malay Mail Online