KUALA LUMPUR, June 27 — AmBank Research expects Bank Negara Malaysia (BNM) to increase the overnight policy rate (OPR) by 50 basis points (bps), bringing the OPR to 2.50 per cent during the upcoming meeting in July, in anticipation of the rising inflation.

In its research note, the research house expects the country’s overall inflation to be between 2.8 per cent and 3.0 per cent this year.

The overall inflation in May 2022 stood at 2.8 per cent year-on-year (y-o-y), bringing the all-year average inflation to 2.4 per cent y-o-y.

"With first five months average at 2.4 per cent, to achieve our target of 2.8-3.0 per cent, the next seven months average should hover between 3.0 per cent and 3.5 per cent, which is seen to be within our target,” it said.

AmBank said despite the current ceiling price for a standard whole chicken being set at RM8.90 per kilogramme (kg), the average price for chicken in June 2022 was RM9.70/kg.

"This implies that sellers are selling above the price ceiling by 9.0 per cent, which would certainly have an impact directly and indirectly on the overall underlying inflation of households,” it said.

It noted that the government had decided not to remove the ceiling price for chicken but introduce a new ceiling price.

"We hope by reintroducing the new ceiling price for chicken, sellers will be able to accommodate this new price without it impacting their cash flow, and resulting in less pressure both directly and indirectly on the cost of living of households,” it said.

The research house expects the new ceiling price to somewhat mirror the current actual market price for chicken of between RM10 and RM12 per kg.

Additionally, it said the removal of the ceiling price for eggs and subsidy for palm cooking oil would have minimal impact on the overall consumer price index (CPI) as eggs and oil only account for 0.9 per cent of the overall CPI basket. — Bernama