OCBC in its report over the latest Consumer Price Index data released by the Department of Statistics said the headline CPI which remained unchanged at 1.8% YoY in March was slightly below expectations (February: 1.8%; Consensus: 2.0%).
DOSM report showed that food inflation eased to 1.7% YoY versus 1.9% in February, which offset increases in the utilities (3.0% YoY versus 2.7%), restaurant (3.0% versus 2.9% in February) and transportation (1.3% versus 1.2% in February) components. Core inflation eased further to 1.7% YoY in March versus 1.8% in February.
Headline inflation averaged 1.7% YoY in 1Q24, below OCBC’s baseline, suggesting that inflationary pressures remain benign. The main risk to inflation in the coming months will be the timing and mechanism of the government’s fuel subsidy rationalisation policies. OCBC noted that, Economy Minister, Rafizi Ramli had said that the government will make an announcement in the coming weeks.
The bank said it will assess the implications of the government’s impending announcement and for now maintains its 2024 average CPI inflation forecast of 2.5%. In terms of monetary policy implications, the house maintains its forecast for BNM to keep its policy rate unchanged at 3.00% for the rest of this year.
