Kuala lumpur: BMI, a Fitch solutions company, has maintained a positive outlook for consumer spending in Malaysia over 2025, with the country’s healthy macroeconomic outlook expected to drive real-term growth in household incomes.

According to BERNAMA News Agency, inflation in Malaysia averaged lower than expected in May, prompting BMI to revise its forecast for headline inflation to 1.9 percent year-on-year (y-o-y) in 2025, down from an earlier prediction of 2.1 percent. This is only a slight increase from the average inflation rate of 1.8 percent in 2024. The lower inflation rate is seen as supportive of household purchasing power.

BMI forecasts household spending to grow by 3.8 percent y-o-y in real terms over 2025, reaching RM930.7 billion, up from MYR896.9 billion in 2024. This indicates a return to growth levels close to the pre-COVID period, where household spending grew at an average rate of 5.2 percent y-o-y during 2015-2019. However, high levels of consumer indebtedness and related debt servicing costs are expected to continue limiting spending.

Looking forward to 2026, BMI anticipates an acceleration in consumer spending, driven by robust GDP growth and a stable employment outlook. Consumer confidence is expected to be bolstered by a stable inflation environment and Bank Negara Malaysia (BNM) cutting its benchmark interest rate by 25 basis points from a projected 2.75 percent in December 2025 to 2.50 percent by the end of 2026.

BMI forecasts total household spending growth to reach 5.0 percent y-o-y in real terms for 2025, bringing total spending to RM977.3 billion. Solid household incomes and tourism-related retail sales are expected to contribute to a steady increase in spending over the 2025-2029 forecast period.