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.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Malaysian inflation projections for the next ten years from a panel of 33 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for Malaysian inflation.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Malaysian inflation projections.

Want to get access to the full dataset of Malaysian inflation forecasts? Send an email to info@focus-economics.com.