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Inflation likely to pick up this year

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KUALA LUMPUR, Jan 30 2019 : Inflation this year is likely to accelerate to two per cent from one per cent estimated in 2018.

Malaysian Institute of Economic Research (MIER) executive director Dr Zakariah Abdul Rashid said among the factors behind inflation are cost push and demand pull, the recent increase in the minimum wage to RM1,100 and a possible rise in oil prices.

MIER sees the Brent crude price as hovering between US$60 and US$70 per barrel in 2019.

“If the oil price is higher than this range, it will put some pressure on most of the items in the Consumer Price Index (CPI).

“In addition, another US Federal Reserve interest rate hike this year will also cause capital flight from the country. So, we need to curb a possible heavy out flow,” he said during MIER’s fourth quarter 2018 gross domestic product (GDP) media briefing here today.

Senior Research Fellow Dr Zulkiply Omar said a lower inflation rate for a long period is also not good for the country.

“Inflation cannot remain at a low level for too long as it shows the country is running at below its capacity. It needs to go up.

“We know external demand is low and the government will surely use domestic demand to enhance the economy. At the same time, it will also have to push for fiscal expansion. This will cause full inflation,” he explained. – Bernama

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