KUALA LUMPUR (Aug 14): Most Malaysian businesses are still absorbing higher input costs rather than passing them fully on to consumers, helping keep inflation contained, Malaysia’s central bank said.
Nearly 80% of businesses reported facing higher cost pressures, but only about half of them indicated that they may pass those costs on to consumers, Bank Negara Malaysia (BNM) governor Datuk Seri Abdul Rasheed Ghaffour said at a press conference on Friday.
“We don't have very strong demand,” he said. “Demand is resilient but it's not excessive, so therefore the businesses' pricing behaviour will also be affected by that.”
BNM maintained its 2026 headline inflation forecast at between 1.5% and 2.5% as recent inflation readings and high-frequency indicators remain broadly in line with its projection.
Headline inflation rose to 1.9% in the second quarter of 2026, picking up from 1.6% in the first quarter, mainly due to higher external cost pressures following the Middle East conflict.
Food prices have rebounded from earlier declines and returned close to pre-conflict levels, while targeted government measures, including fuel subsidies, are expected to continue limiting broader price increases.
Core inflation, which strips out volatile items such as fresh food and administered prices, moderated to 1.9% from 2.1%.
Abdul Rasheed said BNM remains watchful over the impact of the Middle East conflict on commodity and food prices.
“We need to really see in terms of what could be the impact on the commodity prices, what could be the impact on the food prices, and how this will then affect prices in Malaysia itself,” he added.