PETALING JAYA: RHB Investment Bank Bhd (RHB IB) has projected that the inflation momentum will gain pace in the second quarter of 2024 (Q2 2024) following the changes in companies tax and the anticipated rollout of diesel subsidy rationalisation.
In its month-to-month financial view, the funding financial institution has maintained its 2024 headline inflation projection at 3.3% year-on-year (y-o-y).
“According to our estimates, the proposed fiscal consolidation measures are projected to elevate the headline inflation by 0.7% – 1.1% (versus 2.5% y-o-y in 2023).
“So far, the inflation dangers are cushioned by regular meals costs, partially due to the continuation of meals subsidies and worth controls for staple meals objects,” it mentioned.
RHB IB mentioned the precise magnitude of the upside dangers would hinge on a couple of key components.
It mentioned these embrace the efficient date of implementation for gas subsidy rationalisation, the quantum of the costs and tariffs changes, and the energy of second-round impacts on family spending and enterprise prices.
“At this level, there is no such thing as a point out of the efficient date for gas subsidy rationalisation or the brand new retail gas costs.
“The tough timeline for gas subsidy rationalisation is for diesel costs to be rationalised by Q2 2024, adopted by RON95 gas subsidy rationalisation in the second half (H2) of 2024,” it added.
Meanwhile, the financial institution mentioned the in a single day coverage price is probably going to be maintained at 3% for 2024.
RHB IB mentioned it sees the dearth of impetus for Bank Negara Malaysia to tweak its coverage price stage this 12 months, contemplating the rosier home financial prospects amid the uncertainties in the inflationary trajectory.
“A large official inflation vary of two% to 3.5% ought to present enough space towards future worth actions.
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“The central financial institution would possibly maintain its benchmark price till there may be higher readability over the precise timeline and magnitude of gas subsidy reform whereas accessing the lagged impression on general inflationary trajectory and financial momentum,” it added.
