- The retail prices for RON95 petrol and diesel are fixed according to a managed float system effective December 2014 and RON97 has been based on the floating price mechanism since July 2009.

- However, retail prices for RON95 petrol, RON97 and diesel have not been adjusted since March 2015.

- Based on May’s prices, RON 95 petrol is priced at RM1.95 a litre (or -13.7% YTD), RON 97 at RM2.25 a litre (or -8.5%) and diesel at RM1.95 a litre (or -12.6%).

- Note that WTI and Brent crude oil prices were relatively weak and have been trending below USD100 per barrel since 3Q14.

- As transport cost remains in check since March, households could either:- i) divert to other areas of spending; and/or ii) boost savings.

- Transport is the third largest composition of household spending, accounting for 14% of total household expenditure.

- Household spending on Food & Non Alcoholic Beverages accounts for 22.1% of total spending and Housing, Water, Electricity, Gas & Fuels contributes 15.8%.

- Elsewhere, we gather that the recent statistical release by BNM showed improvement in total deposits held by the financial system.

- All in, total deposit in the banking system advanced at a stronger pace of 9.0% YoY in March (February: 8.3%).

- However, the boost in deposits was mainly driven by demand deposits which registered 10.2% growth in March (vs. +6.4% in February).

- Saving deposits had registered a flat growth of 1.2% (February: +1.0%). Meanwhile, term deposits had contracted for the seventh consecutive month in March (-6.0%).

- That said, gross impaired loans had also improved, given a 1.4% MoM reduction in March (February: +1.1% MoM).

- Aside from that, total loans outstanding grew by 9.2% YoY in March 2015, driven by both the household and business segments (February: 8.8%).

- Also, M3 picked up in March to register a growth of 7.9% (vs. 6.9% in February 2015), driven mainly by the extension of credit to the private sector.

- As for April’s inflation, we expect prices to accelerate to 3.0% YoY owing to the implementation of GST. Inflation rate was at 0.9% YoY in March.

Source: AmeSecurities Research - 7 May 2015