KUALA LUMPUR: Bank Negara Malaysia (BNM) has incorporated the potential rationalisation of RON95 fuel subsidies into its inflation forecast for 2025, projecting a rate of between 2 per cent and 3.5 per cent.
Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour said the inflation outlook remains subject to further domestic policy measures as well asvrisks from external developments.
"Year-to-date, both headline and core inflation averaged 1.8 per cent and are expected to remain modest for the remainder of the year. "For 2025, inflation is projected to average between 2.0 per cent to 3.5 per cent, accounting for impending domestic policy measures announced in Budget 2025, including the implementation of targeted RON95 subsidies and the expanded scope of sale and service taxes (SST)," Abdul Rasheed told a press conference here today.
According to him, both headline and core inflation remained stable at 1.9 per cent in the third quarter (Q3) of 2024.
While there were pockets of higher inflation for selected items, such as diesel and vehicle insurance, he said this was offset by broader moderation for food and beverages inflation during the quarter.
"Of note, the stable underlying inflation during the quarter continues to suggest limited spillover to broader prices from the diesel subsidy rationalisation implemented in June, which we largely attribute to effective enforcement and mitigation measures to minimise the cost impact on businesses," he said.
Overall, Abdul Rasheed said the upside risks to the inflation outlook remain contingent on the extent of spillovers from further domestic policy measures to broader prices, as well as lingering risks from external developments, which could drive up global commodity prices or disrupt global supply conditions.
"On the downside, lower domestic inflation could result from weaker-than-expected global growth, which could weigh on global commodity prices and domestic economic conditions through weaker external demand," he added. Ends