DBS economists noted in a report that the expanded Sales and Services Tax (SST), implemented since July, is likely to put modest upward pressure on services sector inflation. However, overall inflationary pressure remains contained by the continued decline in prices for energy-related items, providing a counterbalancing effect.
Nevertheless, DBS believes that the RON-95 gasoline subsidy reform introduced by the Malaysian government at the end of September, due to its calibrated tiered subsidy mechanism and relatively stable international oil prices, is expected to have a limited impact on overall prices in the short term.
Economists generally expect Malaysia's inflation to remain moderate, with core inflation under control.
