Kuala Lumpur: The consumer price index (CPI) is on course to rebound in 2021, thanks to the steady advancement in oil prices amid the likely continuation of supply cut arrangements by the Organisation of the Petroleum Exporting Countries+ until year-end, Public Investment Bank Bhd said.
It said this will be further pushed by a recovery in sentiment following the Covid-19 vaccination programme that will gather speed, especially in the second half of the year.
“The CPI will also get a boost from the full implementation of six fiscal stimulus packages worth RM340 billion, or more than 20 per cent of the country’s gross domestic product, this year,” it said in a note Monday.
The investment bank said the projected addition of at least 500,000 jobs through the private-public initiatives also bode well for the CPI.
The accommodative interest rate environment that is expected to continue in the near future will also support demand and therefore, the headline index, it said.
Similarly, MIDF Research expects the Brent crude oil, which will continue to hover between US$58-US$65 per barrel at least in the first half of this year, to push the CPI.
MIDF reiterates CPI inflation forecast at 2.3 per cent.
“Generally, apart from the low-base effect, inflationary pressures are expected to increase this year on the back of expansionary fiscal and monetary policies, higher commodity prices and returning demand as the economy recovers.
“Successful vaccine rollout in the country will likely improve sentiments and encourage spending. Consumers may start to spend on discretionary items on better income prospects,” it said.
The research house said blanket withdrawal of i-Sinar could pave way for unaffected or less affected contributors to increase their discretionary spending.
Furthermore, there are some pro-consumption goodies in the latest Pemerkasa such as one-off RM500 assistance for the B40 group, who have lost their income, and increase in allocation for the eBelia e-wallet programme and Bantuan Prihatin Rakyat.
.jpg)
