Economists Lower Malaysia’s 2026 Inflation Forecast to 2.0%

KUALA LUMPUR, July 20, 2026 — Economists have revised Malaysia’s 2026 inflation forecast slightly lower to 2.0 per cent, from an earlier estimate of 2.1 per cent, following softer-than-expected price growth during the first half of the year.

Inflation averaged 1.8 per cent year-on-year in the first six months of 2026, despite supply disruptions linked to the conflict in the Middle East. Analysts said the moderation reflects resilient domestic price controls and easing pressures on transportation costs.

Looking ahead, targeted subsidies for RON95 petrol and diesel are expected to continue anchoring inflation in the second half of the year.

Inflation Forecast

The government’s commitment to ensuring adequate domestic fuel supplies through year-end is also expected to support price stability.

Global crude oil prices have remained relatively stable, with Brent crude averaging US$86.7 per barrel so far this year and currently trading near US$84 per barrel, suggesting transport-related inflation should remain contained unless oil prices surge again.

However, analysts cautioned that inflation risks persist. Rising producer prices, with the Producer Price Index (PPI) increasing 7.8 per cent year-on-year in May, could eventually be passed on to consumers. Geopolitical uncertainties in the Middle East, including potential shipping costs linked to the Strait of Hormuz, also remain key risks that could pressure prices in the months ahead.

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