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RAM sees 0.1pc higher inflation in April over pricier RON97

RAM's head of research Kristina Fong says the ratings agency’s current forecast of 1.6 per cent incorporates the cash transfer mode, with everyone paying the same price at the pump. ― Picture courtesy of RAM Ratings
RAM's head of research Kristina Fong says the ratings agency’s current forecast of 1.6 per cent incorporates the cash transfer mode, with everyone paying the same price at the pump. ― Picture courtesy of RAM Ratings

KUALA LUMPUR, May 23 ― RAM Rating Services Bhd (RAM Ratings) said today it expects a 0.1 per cent uptick in April's inflation rate compared to March, mostly due to the higher average price of the pump price for RON97 petrol.

In a statement, the ratings agency said that it expects the inflation rate for April to come in at 0.3 per cent in April, and that the slight increase is underpinned by slightly greater inflationary pressure from the food and transport components.

RAM pointed out that uncertainty over global oil prices will affect its forecast for this year, amid geopolitical concerns that affect supply conditions.

It also said that the yet-to-be announced mechanism (cash transfer vs fleet card) for targeted fuel subsidies, which is still not announced, affect headline inflation projections.

“RAM’s current forecast of 1.6 per cent incorporates the cash transfer mode, with everyone paying the same price at the pump. This will push headline inflation slightly higher relative to the other mechanism, which aims to use a means based system to target different types of users,” the statement quoted RAM's head of research Kristina Fong as saying.

She said headline inflation projects with the most significant bearing will be the intended change to a targeted fuel subsidy system in the second half of the year.

“Our estimates show that this change could contribute 0.4 percentage points to headline inflation this year,” she said.

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