KUALA LUMPUR: The government has reiterated that the projection for the inflation rate this year will be between two and 3.5 per cent.
In reiterating this, Prime Minister Datuk Seri Anwar Ibrahim said the projected inflation could be attributed to the implementation of the fuel subsidy rationalisation implemented by the government recently.
"The national inflation rate for January to May 2024 recorded a moderate increase of 1.8 per cent compared to 3.4 per cent for the same period the previous year, while the inflation rate for May 2024 remained low at 2 per cent.
"As a comparison, the inflation for the Euro Zone increased to 2.6 per cent in May 2024, with the United States recording a 3.3 per cent rate, South Korea (2.7 per cent), the Philippines (3.9 per cent) and Indonesia (2.8 per cent).
"Considering the current low inflation rate, the government considers this as an appropriate time for the implementation of targeted subsidies," he said in a parliamentary written reply.
Anwar said this in response to Datuk Ahmad Amzad Mohamed@Hashim (PN-Kuala Terengganu), who asked about the government's assurance in tackling the increase in the prices of goods which has to be borne by the B40 and M40 groups as a result of the implementation of subsidy rationalisation.
between two per cent and 3.5 per cent in 2024, even with the implementation of fuel subsidy rationalisation.
The inflation forecast range has incorporated some potential upside from the implementation of fuel subsidy rationalisation.
At the same time, Anwar who is also Finance Minister, said even though the price of diesel is currently fixed at RM3.35 per litre, the government still provides subsidised diesel to fishermen and 33 types of public transport and goods vehicles under the subsidised diesel control system to ensure the cost of goods and services are controlled.
He also said the government has introduced the Budi Madani initiative to distribute diesel subsidies accurately to eligible sectors and more than 80 per cent of individual diesel vehicle owners.
He added that the government has aimed to return the savings from the rationalisation of fuel subsidies to the people, whether directly or indirectly to optimise the nation's financial resources, particularly through the education, health, public transportation sectors and other development needs.
"Additionally, the savings from the rationalisation of diesel subsidy will be used to strengthen the social protection agenda.
"Among other things, the government has also increased the allocation for Sumbangan Tunai Rahmah from RM8 billion to RM10 billion in 2024 as a key step taken to prevent the diesel subsidy rationalisation programme from impacting the cost of living, especially for low-income groups.
"The government has initiated this programme at an appropriate time to strengthen the country's fiscal position while the economic situation is still sustainable, including having stable inflation indicators for consumer goods and services prices."