The statistics department said inflation rose to 1.6% year-on-year in December 2025.
PETALING JAYA: Malaysia’s below-trend inflation of 1.4% for the whole of last year has augured well for the economy, even as the country achieved a higher-than-expected gross domestic product growth of 4.9%.
This compares with longer-term trends, with inflation recorded at 1.8% in 2024 and 2.5% in 2023.
According to the Statistics Department, inflation rose to 1.6% year-on-year in December 2025, driven mainly by higher prices for personal care items, education and selected household-related costs.
The annual inflation rate for 2025, however, was recorded at 1.4%, slower than the 1.8% registered in 2024 on the back of more moderate increases in housing-related costs, transport and health, alongside continued price declines in information and communication.
Sunway University economics professor Dr Yeah Kim Leng told StarBiz that the easing inflation to 1.4% in 2025 is consistent with the global disinflation trend arising from lower oil and commodity prices, as well as weak demand.
“Consumer inflation remained subdued as the headline number ticked up slightly as expected to 1.6% in December 2025 from 1.4% in the previous month,” he said.
According to Yeah, with inflation at a benign level and inflation expectations well anchored, things are looking up.
“The country is well placed to sustain growth through appropriate monetary and fiscal policy responses in the event that growth risks materialise.
“With the strong growth momentum in the second half of 2025 and stable macroeconomic policies carrying over into 2026, there is cautious optimism that the economy will be able to weather another year of elevated global uncertainties,” he noted.
On the challenges and risks Malaysia could face this year, Yeah said these are tilted more towards the country’s large exposure to the external environment.
“Continuing global uncertainties, especially geopolitical risks and policy uncertainties, will have a dampening effect on global trade and investment, including an increasing likelihood of financial market crises,” he opined.
Meanwhile, Kenanga Investment Bank Bhd
economist Afiq Asyraf Syazwan Abd Rahim told StarBiz that he expects inflation in January 2026 to remain at 1.6%, supported by base effects.
On the domestic front, he said there are no major new risks beyond the planned introduction of a multi-tier levy for migrant workers, as well as the increase in the sales and service tax (SST) rate.
“The only potential upside risk to prices, although unlikely given the current proximity to the general election, would be diesel rationalisation in Sabah and Sarawak, as well as the SST on RON97,” he said.
He added that globally, geopolitical flare-ups, a renewed escalation in the global trade war, and larger-than-expected fiscal stimulus in the Group-of-10 countries will remain key risks.
Meanwhile, the Statistics Department said the consumer price index (CPI), the country’s main gauge of inflation, stood at 135.5 points in December 2025, compared with 133.4 in the same month a year ago.
Official data also showed that five states recorded inflation rates above the national average of 1.6% – namely Johor (2.3%), Negri Sembilan (2.2%), Pahang (1.8%), Wilayah Persekutuan Labuan (1.8%) and Selangor (1.7%) – while Kelantan recorded the lowest inflation rate at 0.5%.
Compared with regional peers, Malaysia’s inflation rate was lower than Vietnam’s (3.5%), Indonesia’s (2.9%) and South Korea’s (2.3%), but higher than China’s (0.8%) and Thailand’s (minus 0.3%).
