KUALA LUMPUR, 2 June: Inflation is set to accelerate between 3.5 per cent and 4.0 per cent in 2015, the highest since 2008, when the 6.0 per cent Goods and Services Tax is implemented on April 1, 2015.
In a note Monday, RHB Research said that inflation is expected to stay elevated in the next few months due to a change in administrative pricing by the government, with average rate between 3.0 per cent 3.4 per cent in 2014.
The government’s commitment to executing fiscal reforms via subsidy rationalisation has pushed the inflation rate above the 3.0 per cent mark since December 2013.
“We envisage at least another round of fuel price hike in the second half of 2014 given that the government has proposed to reduce total subsidies by RM7.3 billion in Budget 2014,” it said, quoted from Bernama.
The government hiked fuel prices in September 2013 and raised the power tariff on Jan 1, 2014.
Higher business costs following full-scale minimum wage policy implementation and an average 20 per cent hike in natural gas prices for non-power industrial sectors will likely translate into higher consumer prices over time, said RHB Research.
It added the recent increase in fees charged by doctors will only exacerbate the situation, while a few more price increases are in the cards pending the government’s green light, such as public transport fares.