Malaysian headline inflation to have remained at 0.2 pct in May, inflation rise likely to be slower in months ahead

Malaysian headline inflation data for the month of May is set to release tomorrow. According to a DBS Bank research report, the consumer price inflation is likely to have remained at 0.2 percent on a year-on-year basis, unchanged from the previous month. Nevertheless, this should mark the bottom of the inflation cycle, and start rising from June onwards.

Effects from post-election policy changes, including the zero rating of the GST, subsidies for petrol and removal of toll charges, might possibly wane from June. This might lead to a stable rise in headline inflation.

Nevertheless, oil prices were supposed to be an important factor, but it has recently begun to moderate on weaker global outlook.

“This could weigh on inflation. Hence, rise in inflation in the coming months could slower than expected, which could compel us to lower our full year inflation forecast, which currently stands at 1.7 percent”, added DBS Bank.