MIDF RESEARCH KEEPS INFLATION RATE FORECAST AT -1 PER CENT AT END-2020 

KUALA LUMPUR, Oct 21 -- MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained Malaysia’s inflation rate forecast at -1.0 per cent at year-end, weighed down by sluggish crude oil prices and the extension of electricity bill discounts.

In a note today, the research house said improvements in crude oil prices are anticipated to remain sluggish on mounting demand concerns, particularly over surging COVID-19 cases.

“Additionally, the implementation of the government's electricity bill discounts until the end of the year will cushion the impact of utility charges on consumers, hence, contributing to downward pressure on the Consumer Price Index (CPI),” it said.

 The CPI is an economic indicator which measures the rate of inflation.

Despite Malaysian consumers resuming their spending activities, MIDF Research opined that the spending on non-essential items and the overall domestic expenditures would take time to fully recover.

Nevertheless, in view of recovering economic activities, it expected Bank Negara to pause from further easing for the rest of the year. 

“The cumulative cuts of 125 basis points in the Overnight Policy Rate this year is sufficient to provide accommodative monetary policy support to Malaysia’s economy,” it said.

Earlier today, the Department of Statistics Malaysia (DoSM) announced that Malaysia's CPI slipped 1.4 per cent year-on-year (y-o-y) to 120.1 in September 2020 against 121.8 in the same month last year, but was unchanged compared with August 2020. 

DoSM attributed the decline mainly to the fall in transport (-9.9 per cent), housing, water, electricity, gas and other fuels (-3.0 per cent), as well as clothing and footwear (-0.6 per cent), which contributed 41.6 per cent to the overall weighting. 

-- BERNAMA