MIDF Research anticipates that the government will cut fuel prices, particularly RON95 petrol and diesel.
The current price of RON95 is RM2.05 per litre but MIDF Research says a 10 sen reduction is possible by next month. Meanwhile, the current price for Euro 5 B10 diesel is RM2.15 per litre.
If the government lowers the price of RON95 to RM1.95 per litre next month, Malaysia’s headline inflation is likely to ease to 2.9% for 2023 as non-food inflation moderates further towards 1.3%, while transport price experiences deeper contraction of -1.7%.
By year-end, the 10 sen cut will bring the monthly headline inflation rate to +1.9% year-on-year (y-o-y).
This also means the government would have an additional RM4.31 billion in fiscal expenditure and it can be used for other objectives.