KUALA LUMPUR (Oct 9): The Malaysian government is projecting inflation to range between 1.8% and 2.8% in 2027, but cautioned that prices could rise higher if there is renewed escalation of geopolitical tensions and prolonged disruptions to energy and supply chains.
Extreme weather conditions, as well as higher freight and fertiliser costs can also lead to a stronger and more persistent increase in prices, the Ministry of Finance flagged in its Economic Outlook 2027 report.
Its forecast headline inflation for 2027, as measured by the consumer price index (CPI), is higher than the 1.5%-2.5% projected for 2026, with firmer price pressures seen in the earlier part of the year due to carry‑over effects of cost increases in 2026.
“The forecast reflects carry-over effects and lagged transmission of higher energy, food, and other input cost,” the MOF said.
CPI averaged to 1.8% from January-August 2026 — up from 1.4% recorded in the corresponding period in 2025 — while core inflation averaged to 2%.
Under the ministry's current forecast for 2027, "domestic price pressures are anticipated to remain manageable, with economic activity unlikely to generate demand-pull inflationary pressures”.
The main sources of underlying price pressures will still be those from services-related categories, including food away from home, housing-related services and personal care, it said.
"Further adjustments to administered prices, utilities or subsidy mechanisms could also affect the inflation trajectory," it said.
On the other hand, a faster normalisation of global crude oil and food prices, stronger ringgit and softer domestic demand could keep inflation below the baseline projection.