Malaysia’s Sept inflation rate seen picking up to 0.8% y-o-y

KUALA LUMPUR (Oct 22): Malaysia’s consumer price index (CPI) likely rose 0.8% from a year earlier in September, a Reuters poll showed on Monday, accelerating from the previous month after a new tax regime came into effect.

The government reinstated Sales and Services Tax (SST) on Sept 1 to replace an unpopular 6% Goods and Services Tax (GST) that was repealed three months earlier.

Inflation had hit a 3½-year low of 0.2% in August following the withdrawal of the GST, first imposed in 2015.

Economists have said any pick-up in inflation after SST’s reintroduction was likely to be mild, as the tax structure covered a smaller range of goods and services compared with GST, though some items were now taxed as high as 10%.

Malaysia’s central bank left its key interest rate unchanged in its Sept 5 review, but said it expected headline inflation to edge upwards for the rest of the year and through 2019.

Source: TheEdgeMarkets