KUALA LUMPUR: RHB Research Institute expects the headline inflation rate to rise to 2.7 per cent in 2016 from 2.1 per cent in 2015. In a statement today the research house said the sharp depreciation of the ringgit, coupled with higher toll charges and gas prices, will likely exert upward pressure on the headline inflation, especially in the first half of 2016.
“Nevertheless, lingering weak energy prices and slower consumption spending, following the Goods and Services Tax (GST) implementation, tightening of the property sector and elevated household debt, will likely result in a more subdued impact on inflation going forward,” it said.
RHB Reseach said overall, inflation rate decelerated in 2015 from 3.1 per cent recorded in 2014 in spite of the GST implementation. The headline inflation rate inched up to 2.7 per cent year-on-year in December 2015 from 2.6 per cent in November and 2.5 per cent in October 2015.
This was mainly attributed to rising prices of food & beverages, tobacco & alcoholic beverages, healthcare and furnishing & household equipment but partly mitigated by a further drop in transport costs due to falling energy prices.
The research firm said it expects Bank Negara Malaysia (BNM) to maintain the overnight policy rate (OPR) stable at 3.25 per cent in 2016. “As inflation is unlikely to pose a threat going forward following ongoing weak energy prices, BNM will likely put rates on hold for some time,” it said.
