Kuala lumpur: RHB Investment Bank Bhd (RHB IB) has maintained its 2026 inflation projection at 1.8 per cent, reflecting firmer domestic demand. This figure is near the upper end of the official range of 1.3-2.0 per cent.
According to BERNAMA News Agency, RHB IB's Economics View report highlights that demand-driven pressures may rise due to higher disposable incomes and consumption. Improved sentiment from easing tariff risks, robust economic prospects, and enhanced consumer support measures are expected to stimulate domestic activity further.
The report also notes that inflation should remain manageable and below the long-term average of 2.0 per cent, supported by orderly policy implementation and the absence of excessive demand pressures. However, unexpected events like geopolitical tensions or oil supply cuts could create upward pressure on energy prices. A rate hike cannot be completely ruled out if inflation becomes higher and more volatile against the backdrop of robust economic prospects.
Several factors are expected to drive inflation in the coming year, including demand-led inflationary pressure, changes in domestic policies, adjustments in RON95 prices and subsidy mechanisms, electricity tariff restructuring, and global commodity price fluctuations. Meanwhile, RHB IB forecasts the overnight policy rate (OPR) to remain unchanged at 2.75 per cent in 2026, with monetary policy remaining data-dependent, guided by economic growth prospects and inflation dynamics.
According to the Department of Statistics Malaysia (DOSM), Malaysia's inflation increased by 1.6 per cent in January 2026, with index points rising to 135.7 from 133.6 in the same month last year. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin attributed this to growth in four groups, led by personal care, social protection, and miscellaneous goods and services.
Kenanga Investment Bank Bhd noted that inflation should remain contained in 2026, even as growth holds up. Fiscal transfers and credit guarantees will support household demand without generating broad overheating. Targeted fuel and electricity subsidies help limit cost pass-through, while gradual reforms have been implemented. The ringgit's appreciation reinforces imported disinflation through lower prices for fuel, food, and intermediate goods. Upside risks include sales and services tax expansion, migrant levy adjustments, and potential geopolitical disruptions.
Kenanga Investment Bank also stated that policy is likely to remain steady, with growth easing and price pressures contained. Bank Negara Malaysia is expected to maintain the OPR at 2.75 per cent, preserving credibility and exchange-rate stability while retaining flexibility for adverse external conditions.