Sabrina Edora, an analyst at Public Invest Research, has suggested that the subsidy cap for RON95 and diesel, currently set at RM2.05 and RM2.15 per liter respectively, could undergo a review and potentially experience gradual increases by the end of this year.
Highlighting the situation, Edora pointed out that the actual price of RON95 is anticipated to reach approximately RM3.22 per liter without fuel subsidies, presenting a significant difference from the current price of RM2.05 per liter.
"In addition, our estimations indicate that the removal of fuel subsidies for the T20 income group could contribute an additional 0.45% to 0.75% increase in inflation on an annual basis," stated Edora in a research note.
Consumer Price Index Records Slower Growth, Core Inflation Moderates
April 2023 saw the Consumer Price Index (CPI) experience a slower growth rate of 3.3% compared to 3.4% in March 2023, aligning with market expectations.
Furthermore, core inflation, which excludes volatile components, witnessed a more moderate pace with an increase of 3.6% in April compared to 3.8% in March.
Inflation Outlook and Expectations
Public Invest Research has projected that overall inflation in the country is likely to average between 3.0% and 3.5% in 2023. However, it is important to consider that any amendments to the retail fuel price ceiling or the implementation of price control measures may impact these projections.
On a similar note, Bank Negara Malaysia (BNM) expects inflation for the year to range between 2.8% and 3.8%.
Sabrina Edora further commented on the recent trajectory of inflation, noting a downward trend influenced by various cost factors. However, despite the overall subdued conditions, core inflation remains poised to remain at high levels due to strong demand conditions. Edora emphasized the significant risks of inflation increase, which are exposed to potential changes in domestic policies related to subsidies and price controls, as well as developments in financial markets and global commodity prices.
Source: Buletin TV3
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