Key Takeaways
• CPO price at its all time high level and hovering around MYR6,000/Tn causing cooking oil price to soar.
• Price cap policy for cooking oil at IDR14,000/liter seemed ineffective and lifting it off is the government choice triggering cooking oil price at above IDR20,000/liter.
• Assuming cooking oil price at IDR20,000- 25,000/liter, inflation rate in FY22F would be 0.43-0.83 percentage point higher.
• Key drivers for inflation in FY22F : 1) higher commodity price particularly cooking oil and fuel cost; 2) rising tobacco excise duty and 3) VAT hike from 10% to 11% starting from Apr-22.
• Inflation outlook may be around upper target of BI’s ITF at 3.04 3.69% in FY22F.
• VAT hike implementation as well as seasonality factors may cause inflation to be higher during Ramadan festivities.
Disclaimer On
