Govt Expects Inflation To Rise Less Than 0.25 Pct Following SST Review
By Zufazlin Baharuddin
PETALING JAYA, June 18 (Bernama) -- The inflation rate is expected to remain under control, with a projected increase of less than 0.25 per cent following the review and expansion of the Sales and Service Tax (SST) scope, effective July 1.
Treasury secretary-general, Datuk Johan Mahmood Merican said the projection was based on estimates that revenue collection from the Sales Tax would rise by less than 20 per cent as a result of the expanded scope.
“I am aware that a local firm has projected an inflationary impact of around 0.25 per cent. Our internal forecast is slightly lower but within a similar range.
“If the impact remains within 0.25 per cent, it should be manageable in terms of both inflation and the overall cost of living,” he told Bernama after visiting the Royal Malaysian Customs Department here today.
Bank Negara Malaysia reported that inflation stood at around 1.5 per cent for the first quarter of 2025. The central bank is targeting an annual inflation rate of between two and 3.5 per cent for 2025.
On June 9, the government announced a targeted review of the Sales Tax rate and the expansion of the scope of the Service Tax, which will take effect from July 1, 2025.
The Sales Tax rate will remain unchanged for essential daily goods such as chicken, beef, mutton, fish, prawns, squid, vegetables, and local fruits. However, rates of either five or 10 per cent will apply to selected items.
Among the goods to see an increase from zero to five per cent are king crab, salmon, cod, truffle mushrooms, imported fruits, essential oils, silk fabric, and industrial machinery.
Meanwhile, certain premium discretionary items, including racing bicycles and antique hand-painted artworks, will be subject to a 10 per cent tax.
Johan added that the government's decision not to impose Sales Tax on basic necessities was aimed at avoiding a direct impact on the cost of living for the majority of the people and at keeping inflation in check
-- BERNAMA