KUALA LUMPUR, Nov 4 — Malaysians are expected to keep spending steadily over the next two years, but rising food and fuel prices and heavy household debt could take the shine off.

BMI, a country risk and industry research unit of Fitch Solutions, said in its latest outlook today that consumer spending in Malaysia looks broadly positive.

One reason is that jobs remain plentiful, with unemployment at 3.1 per cent, it said.

Prices are also rising slowly, with inflation easing to 1.8 per cent in September from 1.9 per cent in August.

That is comfortably below the upper end of Bank Negara Malaysia’s (BNM) target range of 1.5 per cent to 2.5 per cent.

After taking price rises into account, BMI expects household spending to grow 4.08 per cent in 2026 and 4.07 per cent in 2027.

That would put spending 31.2 per cent higher this year and 36.6 per cent higher in 2027 than before the Covid-19 pandemic.

Stronger oil income and Petronas dividends should help Putrajaya’s finances, BMI said.

Households, however, will feel the pinch from tighter government spending policies and rising living costs.

Higher food and fuel prices are the biggest worry, as food and non-alcoholic drinks make up 25.5 per cent of household spending.

High household debt and the cost of repaying it will also hold back spending growth, BMI said.

On interest rates, BMI expects BNM to leave its benchmark rate unchanged at 2.75 per cent when it announces its decision on Thursday.

It said the central bank is likely to hold off on any change to keep room to act later, given steady growth and manageable inflation.

BMI expects the rate to stay at 2.75 per cent through to 2027. - malaymail