Saturday, 04 Apr 2020
BUSINESS
25/03/2020 06:26 PM

KUALA LUMPUR, March 25 -- MIDF Amanah Investment Bank forecasts inflation to moderate further to 0.5 per cent year-on-year in 2020 from 0.7 per cent in 2019, due to the reduction in both RON95 prices and toll rates for all PLUS highways.

The investment bank said the recent oil war sent the global crude oil prices plunging, with benchmark Brent crude’s price currently hovering below US$30 per barrel.

"As such, we have revised downward Brent crude oil average price forecast for 2020 to US$51 per barrel from US$64.3 per barrel in 2019,” it said in a research note today.

Given the current situation, the price of RON95 is expected to decline even further, far below the level seen in 2019, it said.

"As transport is the third biggest component in the overall consumer price index, these factors will have a significant impact to overall inflation,” said MIDF.

Furthermore, the investment bank said it does not foresee any major demand-pull inflation due to the COVID-19 pandemic.

“Some upward pressure could be expected in food component through imported inflation as Malaysia is a net importer of food and a weaker ringgit will result in the items to be more expensive,” it said.

MIDF said it is also expecting Bank Negara Malaysia to undertake another overnight policy rate cut by 25 basis points as early as May this year due to the low inflation and other downside risks to the economy including COVID-19, global trade tensions, political instability and the US presidential election.

-- BERNAMA

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