• PRESS RELEASES

Overall inflation rate to remain largely unchanged in November

Published on 16 Dec 2019.

Share Tweet Email

RAM Ratings expects Malaysia’s overall inflation rate to stay little changed at 1.0% in November, only a tad lower than the 1.1% of the preceding month. The slight decrease is largely underpinned by a smaller contribution from the alcoholic beverages and tobacco component, as it decelerates against high-base effects from 2018.

With December’s inflation expected to maintain this trend, average overall inflation is anticipated to clock in at 0.7% for the year, before accelerating to 1.9% in 2020. The uptick in inflation will be mainly driven by the proposed fuel price float for Peninsular Malaysia effective next January.

The recent decision by OPEC and allied oil-producing nations to further cut supply by 1.7 million barrels/day (from the current 1.2 million barrels/day) presents potential upside risk to the trajectory of global oil prices in 2020. “There could be some upside to our inflation forecast of 1.9% next year, depending on the effectiveness of the additional OPEC supply cuts which will last until March 2020. However, the magnitude of the run-up in prices will depend on the quantum of non-OPEC supply coming into the market and the state of global demand,” highlights Kristina Fong, RAM’s head of research. These countervailing forces will temper the potential upside to our initial expectations on global oil prices and, in turn, domestic inflationary pressure. Based on our estimates, every USD5 move in the average price of Brent crude will alter 2020 headline inflation by approximately 0.3 percentage points.

 

Analytical contact
Woon Khai Jhek, CFA
(603) 3385 2512
khaijhek@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad



Publication Date Published Category
Economic Insight: November 2019 CPI 16-Dec-2019 Economic Insight View PDF

Loading...