KUALA LUMPUR, Oct. 21 (Xinhua) -- Economists largely maintained their inflation forecasts for Malaysia in 2026 on Tuesday, as fuel subsidies and electricity bill protections continue to contain consumer price pressures, but rising energy costs, geopolitical tensions and potential weather-related food supply disruptions could push inflation higher in 2027.
Hong Leong Investment Bank Research has revised down its 2026 consumer price index (CPI) forecast to 1.9 percent from 2 percent previously, citing continued petrol subsidies, electricity bill protections and the limited pass-through of higher input costs to consumer prices.
However, escalating geopolitical tensions and the lagged impact of El Nino could exert stronger inflationary pressures, prompting the research house to maintain its 2027 inflation forecast at 2.1 percent.
UOB Global Economics and Markets Research retained its 2026 inflation forecast at 2 percent, despite softer inflation in September and average inflation of 1.8 percent in the first nine months of 2026, compared with 1.4 percent in the corresponding period last year.
The research house said targeted fuel subsidies, price stabilization measures and a stable ringgit should help contain cost pass-through. However, adverse weather conditions, sustained energy price shocks and fading base effects remain key upside risks.
UOB also maintained its 2027 inflation forecast at 2 percent, within the government's projected range of 1.8 percent to 2.8 percent.
Kenanga Research likewise kept its inflation forecasts unchanged at 1.9 percent for 2026 and 2 percent for 2027, although it expects risks to remain tilted to the upside.
Kenanga expects inflation to pick up in early 2027 as higher energy, food and input costs feed through the economy with a lag. ■
