Malaysia Oversight

Inflation Outlook Steady, Limited Impact From Fuel Cut

By Bernama in August 25, 2025 – Reading time 2 minute
Inflation Outlook Steady, Limited Impact From Fuel Cut


KUALA LUMPUR, Aug 25 (Bernama) — Public Investment Bank (IB) Bhd has maintained its 2025 headline inflation forecast at 1.9 per cent year-on-year, while CIMB Securities Sdn Bhd trimmed its projections, with both firms expecting only limited impact from the planned fuel price cut.

In a note, Public IB said the government is expected to unveil the RON95 petrol subsidy rationalisation mechanism in late September, alongside a reduction in RON95 retail prices to RM1.99 per litre from RM2.05.

It said the measures, together with broadly stable domestic costs, are unlikely to shift headline prices meaningfully.

“We continue to monitor potential upside risks from Tenaga Nasional’s revised electricity tariff structure and the expanded sales and services tax base, both effective July 2025, though their combined inflationary impact is likely to remain modest,” it said.

It added that phased increases in foreign worker levies and the planned Employees Provident Fund contribution hike for foreign workers in the fourth quarter of 2025 could exert mild upward cost pressures.

Meanwhile, CIMB Securities has lowered its 2025 and 2026 inflation forecasts to 1.5 and 2.0 per cent respectively, from 2.2 and 2.5 per cent.

It said the 2026 outlook remains shaped by domestic policy changes, particularly retail fuel subsidy rationalisation.

“Latest data show business profit margins, measured by the CPI-PPI spread, remain positive, supported by a firmer ringgit in 2025 that has helped ease imported cost pressures and reduced producers’ incentive to pass on costs to consumers.

“The planned RON95 price adjustment is expected to have limited impact on headline CPI, given petrol’s 5.5 per cent weight in the CPI basket,” it said in a separate note.

— BERNAMA


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