MBSB Investment Bank forecasts Malaysia's inflation to hit 2.0%

Malaysia's headline inflation is projected to increase to 2.0% this year, a notable rise from 1.4% recorded in 2025, according to MBSB Investment Bank Bhd. The bank maintained its forecast, highlighting the continued influence of government policies and fuel subsidies in mitigating the impact of global energy price surges.

The investment bank anticipates that domestic demand will remain robust throughout the year. This strength is expected to be underpinned by several factors, including increased consumer spending, a consistently stable labor market, and the government's ongoing fiscal measures designed to support economic growth. These elements collectively contribute to a positive outlook for consumer activity and overall economic performance.

Despite the strong domestic demand, MBSB Investment Bank noted that price pressures are likely to stem more significantly from supply-side factors. The bank's analysis indicates that core inflation is expected to remain stable, suggesting that the anticipated rise in headline inflation is not primarily driven by overheating domestic demand but rather by external or supply-related influences. This distinction is crucial for understanding the nuances of Malaysia's economic landscape.