Government likely to lower RON95 petrol, diesel prices to ease cost of living in Malaysia, says MIDF Research

According to a study by Bernama, MIDF (Malaysian Industrial Development Finance) Research anticipates the authorities volition chopped substance prices – peculiarly RON 95 petrol and diesel – to guarantee terms stableness and easiness the outgo of surviving successful Malaysia. At present, the ceiling terms per litre for RON 95 petrol is RM2.05, portion it is RM2.15 for Euro 5 B10 diesel.

“If the authorities cuts the RON 95 terms by 10 sen to RM1.95 per litre adjacent month, Malaysia’s header ostentation is apt to easiness to 2.9% for 2023 arsenic non-food ostentation moderates further towards 1.3%, portion transport terms experiences deeper contraction of -1.7%,” MIDF Research said successful a note.

It added that by the extremity of 2023, the 10-sen simplification volition bring the monthly header ostentation complaint little to +1.9% year-on-year (YoY). This means the authorities would person an further RM4.31 cardinal successful fiscal expenditure, which tin beryllium utilised for different objectives.

“On apical of that, the authorities volition person adjacent amended fiscal space, fixed that fiscal debt-to-gross home merchandise (GDP) ratio has fallen to 59.3% successful the archetypal 4th of 2023, and including contingent liabilities, the latest fig is 76.1%,” MIDF Research said. Referring to the user terms scale (CPI) weightage, transport outgo is the 3rd largest load aft nutrient arsenic good arsenic lodging and utilities.

“Considering the continuous elevated nutrient ostentation and downward income pressure, we expect the authorities to opt for slashing retail substance prices, peculiarly RON 95 petrol and diesel successful the adjacent term. Structurally, being a nett nutrient importer and aggravated by depreciated ringgit, it volition beryllium hard for the authorities to incorporate nutrient inflation,” the probe location said.

In the archetypal fractional of 2023, the Brent crude lipid terms averaged astatine USD79.20 per barrel, which is somewhat little than the government’s estimation of USD80 per barrel. As such, MIDF Research estimates the non-subsidised marketplace terms for RON 95 to beryllium RM3.10 per litre. Last year, the RON 95 terms differential against marketplace terms widened to RM1.86 per litre.

“Thanks to normalising planetary lipid price, the substance terms differential is estimated to beryllium overmuch little astatine RM1.05 per litre this year. With the little terms differential, we judge the full subsidy expenditure volition beryllium little than past year,” MIDF Research noted.

The station Government apt to little RON95 petrol, diesel prices to easiness outgo of surviving successful Malaysia, says MIDF Research appeared archetypal connected Paul Tan's Automotive News.