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MALAYSIA’S headline and core inflation in 2025 remained contained at 1.4 per cent and two per cent, respectively, down from 1.8 per cent the previous year, according to Bank Negara Malaysia (BNM).
BNM Governor Datuk Seri Abdul Rasheed Ghaffour noted that in the fourth quarter of 2025, headline inflation held steady at 1.3 per cent, while core inflation edged higher to 2.3 per cent from 2.0 per cent in the third quarter.
He attributed the increase in core inflation primarily to faster price growth in certain sectors, including jewellery and watches, as well as base effects from mobile communication services.
“This was largely offset by lower prices for selected administered items, particularly electricity, which fell by 10.3 per cent in 4Q 2025 compared with 4.6 per cent in the previous quarter, and petrol, which declined by 2 per cent from 0.6 per cent in 3Q 2025, reflecting larger discounts on electricity generation costs and the targeted RON95 fuel subsidy implemented from October 2025,” he said.
Inflation pervasiveness, a measure of the proportion of consumer price index items registering monthly price increases, fell to 39.6 per cent in the fourth quarter from 43.8 per cent in the third, remaining below the historical fourth-quarter average of 41.7 per cent.
Looking ahead, Abdul Rasheed said headline inflation is expected to remain moderate in 2026 amid continued easing of global cost pressures.
“The modest commodity price outlook would help contain cost pressures on inflation. Core inflation is expected to remain broadly stable and close to its long-term average, reflecting continued economic expansion and the absence of excessive demand pressures,” he said.
The governor also highlighted that domestic policy reforms implemented in 2025, including the expansion of the Sales and Service Tax and the rationalisation of the RON95 fuel subsidy, are projected to have only modest effects on inflation next year.
Meanwhile, the Malaysian ringgit strengthened significantly in 2025, appreciating 10.2 per cent against the US dollar and 6.3 per cent on a nominal effective exchange rate (NEER) basis.
In the fourth quarter alone, the ringgit rose 3.9 per cent against the greenback and 3.8 per cent against the currencies of Malaysia’s major trading partners.
“Externally, the narrowing of interest rate differentials following US Federal Reserve policy rate cuts in October and December supported the ringgit, alongside reduced tariff-related uncertainties after the conclusion of US trade agreements with regional partners, including Malaysia.
“Domestically, Malaysia’s positive economic prospects, underpinned by reform efforts, have reinforced investor confidence and improved sentiment in financial markets,” Abdul Rasheed said.
The governor added that future movements of the ringgit will continue to be influenced by external factors, but resilient domestic fundamentals are expected to provide ongoing support.
“Coordinated efforts by the government and BNM, such as the Qualified Resident Investor programme allowing resident corporates to reinvest abroad, and proactive engagement with investors, exporters, and importers, will continue to encourage healthy two-way flows in domestic financial markets.
“BNM will also ensure the orderly functioning of the foreign exchange market,” he said.
The ringgit closed at 4.0580/0620 against the US dollar on the final day of 2025 and was trading at 3.8945/9110 against the greenback this morning. - February 13, 2026