KUALA LUMPUR: Malaysia’s inflation is projected to average 2.0 per cent to 3.5 per cent in 2025, factoring in domestic policy measures outlined in Budget 2025, said Bank Negara Malaysia (BNM).
The central bank’s governor, Datuk Seri Abdul Rasheed Ghaffour, said that this includes the implementation of targeted RON95 fuel subsidies and the expanded scope of the Sales and Service Tax (SST).
“Upside risks to the outlook remain contingent on the extent of spillovers from further domestic policy measures to broader prices.
“The lingering risks from external developments also could drive up global commodity prices or disrupt global supply conditions,” he said during today’s press conference on the gross domestic product of the third quarter of 2024 (3Q 2024).
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On the downside, Abdul Rasheed said lower domestic inflation could result from weaker-than-expected global growth, which could weigh on global commodity prices and domestic economic conditions through weaker external demand.
In 3Q 2024, both headline and core inflation remained stable at 1.9%.
“While there were pockets of higher inflation for selected items, such as diesel (20.1%) and vehicle insurance (0.8%), this was offset by broader moderation for food and beverages (1.6%) inflation during the quarter,” he said.
Abdul Rasheed added that the stable underlying inflation during the quarter suggests limited spillover to broader prices from the diesel subsidy rationalisation implemented in June, which is attributed to effective enforcement and mitigation measures to minimise the cost impact on businesses.
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He said that measures under Budget 2025, including implementing a minimum wage, would be positive for economic growth as it would support private consumption.
“In terms of inflation, we believe the impact will be rather limited. We have seen in the previous increment in minimum wage, the impact on inflation has been rather small,” he added.
