How will the low base effect impact fuel price inflation?

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Low Base Effect to Drive Fuel Price Inflation Higher

The low base effect from the previous year is expected to significantly impact fuel price inflation, causing it to rise in the immediate months. This phenomenon is primarily attributed to the substantially lower average RON 95 fuel price recorded in May of the preceding year, RM2.09 per litre, compared to the price in April of that same year, RM2.21 per litre.
Retail Fuel Inflation Rebounds in May

Malaysia’s retail fuel inflation saw a marked increase of 5.1 per cent in May, a stark contrast to the 0.3 per cent contraction observed in April. This shift is largely a consequence of the low base effect, as the average price of RON 95 fuel in May 2017 was considerably lower than in April 2017.
Stable RON 95 Prices Amidst Subsidies

In the current year, RON 95 prices have remained stable at RM2.20 per litre since March. This steadiness is expected to continue, owing to the reinstatement of fuel subsidies. This stability, when compared to the lower prices of the previous year, amplifies the low base effect.
Anticipated Rise in Inflationary Pressure

The inflationary pressure stemming from the retail fuel component is projected to continue its upward trend through June and July. This is directly linked to the increasing low base effect from the corresponding periods of the previous year, which will make year-on-year price comparisons appear more significant.

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How will the low base effect impact fuel price inflation?

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