KUALA LUMPUR, July 20 (Xinhua) -- Malaysia's inflation outlook remains exposed to upside risks from geopolitical tensions and volatile commodity prices, although fuel subsidies are expected to help contain cost pressures, research houses said Monday.
The assessments came after official data showed Malaysia's inflation rate accelerated to 1.9 percent in the second quarter of 2026, up from 1.6 percent in the preceding quarter.
Maybank Investment Bank said in a note that inflation risks remain skewed to the upside due to continued uncertainty surrounding the Middle East conflict and fluctuations in crude oil, fuel, energy and transportation costs.
However, it noted that ongoing fuel subsidies should help mitigate some of the external cost pressures.
BIMB Securities similarly said inflation risks remain tilted upward, particularly from prolonged geopolitical uncertainties and commodity price volatility.
"Any re-escalation of the U.S.-Iran conflict could reverse the recent easing in global commodity prices, especially energy, and renew inflationary pressures through higher fuel and production costs," the research house said in a note.
Nevertheless, BIMB expects inflation to remain manageable at around 2.4 percent in the near term, supported by fuel and food subsidies that continue to shield households from global price shocks.
MBSB Research also cautioned that renewed geopolitical tensions could sustain elevated energy prices and prolong cost-push inflationary pressures into the second half of the year. It added that higher producer prices could gradually pass through to consumers.
The research house also said in a note that it maintained its forecast for headline inflation to average 2 percent in 2026, compared with 1.4 percent in 2025, while noting that resilient consumer spending, a stable labor market and supportive fiscal measures should continue to underpin domestic demand. ■
