Expect pump prices to rise, says Public Investment Bank
Published on: Tuesday, April 25, 2023
By: Bernama
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An increase in fuel prices can lead to higher inflation.
Kuala Lumpur: The ceiling prices of RON95 and diesel are likely to rise above current levels of RM2.05 and RM2.15 per litre respectively in the coming months, Public Investment Bank Bhd (PIVB) said today.
It said the subsidy that had capped the ceiling price of both types of fuel could be subject to a review soon.
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It estimated that the price of RON95 would be as high as RM3.22 per litre if not for the subsidy.
However, PIVB said, the gradual adjustments to subsidised prices of RON95 and diesel in the second half of 2023 (H2 2023) could push headline inflation towards the upper limit of official projections of 2.8% to 3.8%.
It said that eliminating fuel subsidies for the T20 (20% of the population who are the wealthiest) would raise inflation by an additional 0.45% to 0.75% annually. The T20 group benefited from 35% of all fuel subsidies in 2022.
On the other hand, several external factors are also likely to push inflation up this year.
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PIVB singled out several upward risks, such as elevated global commodity prices brought on by geopolitical tensions, adverse weather patterns, stronger-than-anticipated Chinese demand and elevated input costs resulting from exchange rate developments.
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