Kuala lumpur: Malaysia's inflation is anticipated to maintain a low and stable trajectory in the near future, despite the potential for modest upward pressure from the expanded sales and service tax (SST), as reported by MBSB Investment Bank Bhd (MBSB IB). The bank's analysis suggests that the impact of the SST could be mitigated by factors such as the continuation of the RON95 fuel subsidy, a stronger ringgit, and decreasing global food prices.

According to BERNAMA News Agency, MBSB IB highlighted potential risks to inflation due to the exclusion of micro, small, and medium enterprises from the BUDI95 targeted fuel subsidy. This exclusion could lead to higher fuel costs being transferred to consumer prices. Additionally, Malaysia's producer price index (PPI) showed a further decline of 1.8 percent in November 2025, following a 0.1 percent decrease in October 2025. This marks the most significant drop since August 2025 and continues a nine-month trend of deflation.

MBSB IB's report pointed out that the PPI decline was primarily due to a sharp decrease in prices within the agriculture, forestry, and fishing sector, which fell by 9.7 percent year-on-year. This decrease was further influenced by a 16.2 percent year-on-year reduction in the growing of perennial crops index. Moreover, the deflation in the mining sector's PPI was more pronounced, with a 7.2 percent year-on-year decrease, driven by declines in the extraction of crude petroleum and natural gas indices by 5.5 percent and 11.4 percent year-on-year, respectively.