Malaysian headline inflation likely to have slowed in August

Malaysian headline inflation data for August is set to be released tomorrow. According to a DBS Bank research report, the consumer price inflation is likely to have slowed to 0.5 percent year-on-year from 0.9 percent recorded in July.

Amidst higher energy prices, inflation was supposed to be on an upward trend if not for the zero rating of the GST. After the surprise outcome in the recent election, the new government abolished the GST and reintroduced the Sales and Services Tax.

Tax regime are likely to see changes to considerably lower the end-consumer prices, which would be captured in the CPI index. Significantly, this reduces the total trajectory for the inflation curve. Nevertheless, inflation is likely to accelerate above 1 percent after the reintroduction of the SST in September, added DBS Bank.