The average for the year will, however, be between 2.5% and 4%.

Headline inflation, which measures the total inflation within an economy, including commodities such as food and energy prices, was -1.2% in the second quarter of 2020 where the country went into a complete lockdown to curb the spread of the Covid-19 virus.

“In terms of trajectory, headline inflation is anticipated to temporarily spike above 5% in the second quarter of 2021 due to the lower base from the low domestic retail fuel prices in the corresponding quarter of 2020 before moderating thereafter,” BNM governor Nor Shamsiah Mohd Yunus said.

Last year, the pump prices in Malaysia were about RM1.37, versus RM1.95 this year.

Hence, Nor Shamsiah asserted that the spike is temporary.

She said the government has set the ceiling price for RON95 petrol at RM2.05 per litre and RM2.15 per litre for diesel. Core inflation, however, is expected to remain subdued, at 0.5% to 1.5% this year.

Core inflation measures the change in average consumer prices after excluding from the index certain items with volatile price movements such as fuel price.

The outlook is subject to global oil and commodity price developments.