KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) and Public Investment Bank Bhd (PublicInvest) have projected Malaysia's headline inflation to ease to an average of 1.9 per cent in 2026, while Apex Securities Bhd has a slightly lower forecast of 1.8 per cent.
In separate notes today, HLIB lowered its consumer price index (CPI) forecast to 1.9 per cent from 2.0 per cent previously, citing continued petrol subsidies, electricity bill protections and limited pass-through of higher input costs. PublicInvest retained its revised forecast at 1.9 per cent, down from 2.1 per cent previously.
The analysts said Malaysia's headline inflation, which refers to total price changes in an economy, eased to 1.8 per cent year-on-year (y-o-y) in September from 1.9 per cent in August. Core inflation, which excludes food and energy, remained steady at 1.7 per cent.
HLIB said the moderation was mainly due to softer inflation in housing, utilities, food and beverages, and information and communication, with headline inflation averaging 1.8 per cent in the first nine months of 2026 (9M 2026).
HLIB said inflation in housing, utilities and other fuels eased to 1.4 per cent from 2.1 per cent, partly reflecting a high base effect following a targeted water price increase in September last year, while electricity inflation softened following the expansion of the monthly electricity bill protection threshold from 600 kilowatt-hours (kWh) to 800 kWh from Sept 1 to Dec 31, 2026.
It said food inflation moderated to 1.8 per cent from 1.9 per cent as inflation for food at home eased while food away from home edged higher to 2.6 per cent from 2.5 per cent. Transport inflation accelerated to 2.5 per cent from 2.0 per cent.
HLIB also said recent escalation of geopolitical tensions and the lagged impact of El Nino could lead to stronger inflationary pressures, prompting it to maintain its 2027 CPI forecast at 2.1 per cent.
Meanwhile, PublicInvest said underlying price pressures have remained contained, but high oil prices, Gulf shipping disruptions and El-Nino-related food price pressures could push consumer prices higher.
"Targeted fuel subsidies and the temporary expansion of electricity-bill exemptions to 800 kWh should cushion household costs through end-2026," it said. It said persistent input-cost pressures could drive up retail and services inflation.
PublicInvest has projected inflation at 2.3 per cent in 2027. It said Budget 2027 household assistance and income tax relief should support consumption.
But the RM2,000 minimum wage from June 2027 could raise labour costs, notwithstanding exemptions for micro, small and medium enterprises.
Separately, Apex Securities Bhd's external trade research has headline inflation forecasts of 1.8 per cent for 2026 and 2.0 per cent for 2027.
The research house has raised its 2026 export growth forecast to 35.1 per cent from 26.2 per cent, reflecting stronger-than-expected growth momentum in the first nine months of the year. It remains positive on electrical and electronics exports, supported by the global technology upcycle and structural demand for artificial intelligence-related applications.
Nevertheless, Apex Securities said downside risks remained, particularly from prolonged West Asia tensions that could disrupt global trade flows and continued uncertainty surrounding United States trade policy.
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