Malaysia's inflation predicted to climb 1.8%

Inflationary pressure has stayed benign, says analyst.

According to DBS, inflation is expected to remain fairly stable in May. The headline number due today will likely print an increase of 1.8% YoY, up slightly from 1.7% in the previous month. 

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Inflationary pressure has remained benign despite the election spending and depreciation in the ringgit. While there has been concern that the recent currency depreciation will stoke higher imported inflation, the external inflationary pressure has been low due to weak global growth.

Coupled with the domestic price stability (subsidy) programme, which will not be unwound in the nearterm due to risk of political backlash, inflation is unlikely to rise above the 3.0% level in the coming months.

That’sthe main reason why we have lowered ourinflation expectation as well as removed the earlier rate hike call. Full year inflation is now expected to average just 2.0% forthe year.