RAM Rating Services Bhd (RAM Ratings) projected inflation had inch up to 0.3% in December last year compared to 0.2% in November as pressures from the transport fuel component eased.
In a statement yesterday, the rating agency said the price of RON95 petrol fell 3.3% year on-year the same month, following a 4.5% drop in November.
“As such, overall inflation is envisaged to come in at 1% in 2018,” it said.
RAM Ratings has also revised its projection for 2019 headline inflation to 2%, from the initial 2.7%.
“This is mainly due to changing expectations on global oil prices, which are increasingly pointing to a lower average range of US$60 (RM246)-US$65/ barrel for 2019.
“Our sensitivity analysis indicates that for every US$5/ barrel move in the price of Brent crude, headline inflation potentially changes 0.3 percentage points,” it said.
However, RAM Ratings does not see the move back to the weekly automated pricing mechanism for pump prices from January 2019 will exert any significant downward pressure on inflation, given the short period it will be in place ahead of the anticipated targeted fuel subsidy mechanism to be implemented in the second quarter of 2019.