Limited impact on inflation from diesel rationalisation - BNM

The impact of the recently implemented diesel subsidy rationalisation remains manageable, said Bank Negara Malaysia (BNM).

The central bank’s governor Abdul Rasheed Ghaffour said this is despite the slight rise in inflation prints.

Government mitigation measures have minimised the cost impact on businesses, he added.

Therefore, he said the headline and core inflation for the year are projected to remain within the two to 3.5 percent and two to three percent forecast respectively.

Rasheed noted that the impact of the diesel and RON95 petrol subsidy rationalisation has been factored into the forecasts to a certain extent.

Nevertheless, Prime Minister Anwar Ibrahim recently said RON95 subsidy rationalisation remains off the table for now as the government wants to ensure the public fully understands the exercise.

Medical cost inflation

During the media conference, Rasheed also highlighted the consistent double-digit rise in medical cost inflation, which requires collective action by stakeholders.

He said medical cost inflation in Malaysia grew 12.6 percent last year, more than double the 5.6 percent global average and 6.2 percent recorded in Asia Pacific.

Therefore, BNM has mandated insurers/takaful operators (ITOs) to provide co-payment options for medical and health insurance and takaful products.

“This is to provide a choice to the consumer. We have required banks starting in September to offer products with co-payment elements. So it’s more of an alternative,” he said.

The governor said co-payment products are 19 percent to 68 percent cheaper than similar non-co-payment offerings.

To protect consumers, ITOs have to inform the maximum co-payment cap they have set before consumers purchase any of them.

- Bernama

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