Malaysian headline inflation likely to have accelerated in June

Malaysian inflation data for the month of June is set to release tomorrow. According to a DBS Bank research report, the headline inflation is likely to have accelerated to 1.6 percent year-on-year. This will be in line with the expectation that the effects from the post-election policy changes, including the zero rating of the GST, subsidies for petrol and removal of toll charges, will wane from June onwards.

Inflation is expected to stay range-bound between 1.5-2 percent in the months ahead because of soft growth momentum and a lack of inflationary pressure. Oil prices were supposed to be a major driver; however, it has been lacklustre on a softer global outlook.

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