APRIL’S 0.3 PCT INFLATION RATE MAINLY DRIVEN BY UPTICKS IN RON97 AND FOOD PRICES - RAM RATINGS

KUALA LUMPUR, May 23 (Bernama) -- RAM Rating Services Bhd (RAM Ratings) expects the inflation rate to come in at 0.3 per cent in April as compared to 0.2 per cent in March, underpinned by slightly greater inflationary pressure from the food and transport components.

The former was mainly driven by low-base effects from the previous year while the latter was attributable to the higher average price of RON97 petrol, which was consistent with the uptrend in Brent crude prices, it said in a statement here.

The rating agency pointed out the uncertainty over the trajectory of global oil prices would remain the greatest upside risk to its forecast this year, amid lingering geopolitical concerns that affect supply conditions.

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“Besides, the eventual mechanism (cash transfer vs fleet card) for targeted fuel subsidies, which is still not announced, will also affect our headline inflation projections,” it added.

RAM Ratings’ current forecast of 1.6 per cent incorporates the cash transfer mode, with everyone paying the same price at the pump. This will push headline inflation slightly higher relative to the other mechanism, which aims to use a means-based system to target different types of users.

It added the headline inflation trends this year would be underscored by policy changes and the one with the most significant bearing would be the intended change to a targeted fuel subsidy system in the second half.

“Our estimates show that this change could contribute 0.4 percentage points to headline inflation this year,” said the head of research, Kristina Fong.

-- BERNAMA