Kuala Lumpur: MIDF Amanah Investment Bank Bhd anticipates the implementation of RON95 fuel subsidy rationalisation may be pushed to the fourth quarter of 2025 due to unresolved issues such as eligibility and the delivery mechanism. The potential delay in RON95 fuel subsidy rationalisation to the second half of 2025 is expected to offer temporary relief to consumers, supporting private consumption amid stable inflation.

According to BERNAMA News Agency, Finance Minister II Datuk Seri Amir Hamzah Azizan recently stated that the rationalisation of RON95 fuel subsidies will be implemented in the second half of 2025. He added that the Finance Ministry will continue with the subsidy rationalisation process, but the current focus is on identifying the groups that will be eligible to receive the subsidy.

MIDF Amanah Investment Bank Bhd reiterated that while the Finance Ministry targets a rollout in the second half of 2025, they anticipate implementation may be pushed to the fourth quarter due to unresolved issues like eligibility and the delivery mechanism. The investment bank also noted that consumers are unlikely to face any significant price pressure via pass-through mechanisms.

However, MIDF Amanah warned that inflationary pressures could emerge later in the year, driven by potential price pressure stemming from subsidy reforms and higher utility costs for businesses. They also noted that the gap between the Producer Price Index (PPI) and the Consumer Price Index (CPI) continues to widen, with the CPI growing modestly by 1.4 per cent year-on-year in April 2025.

On Wednesday, the Statistics Department Malaysia reported that April 2025’s PPI contracted by 3.4 per cent year-on-year. It was the second month of decline and the sharpest drop since June 2023. The weaker price pressure was mainly due to a steeper double-digit price decline in the mining sector, attributed to a sharper drop in crude petroleum prices while natural gas prices saw a more moderate decline.