Malaysia: Inflation rises in December from November
Latest reading: Consumer prices were up 1.6% on a year-on-year basis in December, following a 1.4% rise in the previous month. December’s reading was the strongest since January 2025. Over 2025 as a whole, inflation averaged 1.4%, decreasing from the previous year’s 1.8%.
Relative to the prior month’s figures, price pressures were higher for housing and utilities in December (+0.9% in annual terms vs +0.7% in November). In contrast, there were reduced price pressures for transportation (+0.1% vs +0.2% in November) and recreation services and culture (+0.8% vs +1.2% in November). Finally, the variation in food and non-alcoholic beverages prices was the same as in the prior month (+1.5% in both December and November).
Transportation prices almost flatlined, as the BUDI95 fuel subsidy program continues to apply to the population as a whole without a means test. Furthermore, fuel use was well below the monthly limit.
Finally, consumer prices increased 0.30% in December in month-on-month terms, following a flat reading in the previous month.
Outlook: Our Consensus indicates that inflation will rise to a five-quarter high in Q1 and accelerate further by year-end. In 2026 as a whole, price pressures should pick up from the previous year on a low-base effect and expected fiscal reforms, including higher excise taxes on alcohol and tobacco plus a new carbon tax. Still, inflation should remain below the ASEAN average, capped by broadly steady interest rates and a stronger ringgit vs the USD.