Lim quoted the figure from RHB Research Institute Sdn Bhd when answering a question on the expected impact of the sales and services tax (SST) on inflation at a media briefing at his ministry today.

“According to RHB’s figures, the July inflation rate was 0.9% compared to the June inflation rate of 0.8% but the core inflation of minus 0.2% went down for the first time in history.

“Inflation must always be positive, even without taxes, due to supply and demand factors, such as the price of oil which we cannot control.”

But he said June’s inflation rate, one of the lowest in history, along with July’s core inflation rate showed the impact of the GST.

The 6% GST was zero-rated from June 1 after Pakatan Harapan ousted the previous Barisan Nasional administration and implemented its polls promise to abolish the unpopular consumption tax.

The GST will be replaced with the SST on Sept 1.

Lim said the government was expecting some inflation post-SST and noted that RHB was expecting inflation for 2018 at 1.2% adjusted from its original 1.9%.

“Whether that can be achieved, I don’t know. It depends on how the impact of SST is absorbed by the economy and if there is profiteering.”

Compared to the headline inflation of 2017 of 3.7%, Lim said it would be “good enough” for him if inflation is kept at 2% for 2018.

On the issue of GST refunds to businesses, Lim said the money will be returned to the taxpayers.

“It’s not the government’s money. I’ve just discussed this with the Prime Minister and the Cabinet.

“It (refunds) will be settled next year.”

Previously, Lim said the government faced a shortfall of RM19.25 billion because there was only RM148.6 million in the GST Refunds Trust Account when the amount should be RM19.4 billion.

This was confirmed by Customs director general T Subromaniam who said the department had requested, at the monthly trust account committee meetings, for the transfer of RM82.9 billion into the account but only RM63.5 billion was banked in.