KUALA LUMPUR: Bank Negara Malaysia (BNM), which has maintained its headline inflation forecast of between 2 per cent and 3.5 per cent for the year, is however confident it will not exceed the 3 per cent mark given the trend seen in the first half of 2024.
"The range of 2 per cent to 3.5 per cent has incorporated both diesel and also RON95 to a certain extent.So it should be within reach. But at the moment, our view is that it should be around 3 per cent. It may not be even close to 3 per cent, given what we're seeing (that inflation) has been behaving quite well," BNM governor Datuk Seri Abdul Rasheed Ghaffour said.
He said headline and core inflation averaged 1.8 per cent in the first half of 2024.
"This is in line with the moderating cost environment and the stabilising demand conditions. The 2.0-3.5 per cent has incorporated both diesel and also RON95 ( if implemented) to a certain extent," he told a press conference in conjunction with the second quarter of 2024 (Q2 2024) gross domestic product (GDP) here, today.
Abdul Rasheed said headline and core inflation are expected to edge higher in 2H 2024 mainly due to the rationalisation of diesel subsidies.
However, he said the impact will remain manageable given mitigation measures by the government to minimise cost impact to businesses.
"For the rest of the year, upside risks to inflation depend on the extent of the spillover effects from further domestic policy measures on subsidies and price controls to broader price trends, as well as global commodity prices and financial market developments," he added. Ends