Malaysia’s inflation rate is projected to remain between 1.5 and 2.5 percent this year despite ongoing geopolitical tensions, even as Putrajaya warns that a United States-Iran peace deal would not bring immediate relief from oil-related price pressures.
Economy Minister Akmal Nasrullah Nasir said the government remains focused on ensuring that inflation does not significantly affect economic stability or drive up the cost of living, even as price pressures are expected to persist.
“For 2026, our comfortable projection is for inflation to occur between 1.5 and 2.5 percent.
“This is our target so that inflation movements remain within the scope that we can handle and do not have a significant impact on the people,” Bernama quoted him as saying to reporters after the ministry’s monthly gathering in Putrajaya today.
“So far, we have managed to maintain inflation at around 1.9 percent, but the pressure will continue to have an impact.
“That is why we continue to look at official data and the actual situation at the industry level so that intervention measures can be taken earlier,” the minister added.
Noting that current inflationary pressure is due to increases in costs related to oil supplies and input goods needed to maintain economic activity, he cautioned that global oil supply chains are unlikely to recover immediately, even if the US and Iran reach a peace deal.
This, he said, is because key trade routes and war-damaged infrastructure would still require time to be restored.
He added that any move towards peace would be a welcome development as ongoing geopolitical tensions have had a noticeable impact on Malaysia's economy, particularly on oil supplies.
“If a peace agreement is indeed achieved, its impact will take time to materialise because conditions along the Strait of Hormuz and infrastructure affected during the conflict would need to be restored.
“That process will not happen overnight,” Akmal said.
Mitigation measures
Commenting on reports that Washington and Tehran had agreed to pursue a peace agreement, Akmal noted that the Strait of Hormuz remains a vital artery for global oil trade.
Any disruption there, he said, would have repercussions on energy costs and inflationary pressures worldwide, including in Malaysia.
Referencing the National Economic Action Council’s continued work, he further assured that the government is proceeding with various mitigation measures, including the targeted distribution of fuel subsidies and control of logistics costs through the Subsidised Diesel Control System.
He also highlighted the RM5 billion additional financing through the Business Financing Guarantee Scheme and Bank Negara facilities, with the funds aimed at helping small businesses survive.
“At the ministry level, we remain committed to identifying what role we can play in easing current pressures until there is greater clarity on how and when this crisis will come to an end," he said.
Earlier today, Iran’s Deputy Foreign Minister Kazem Gharibabadi said a memorandum of understanding between the Islamic Republic and the US had been finalised and would be officially signed on Friday.
According to remarks carried by Iran’s semi-official Mehr News Agency, he said the formal signing ceremony for the MOU would take place in Geneva, Switzerland, with the lifting of the US naval blockade against Iran expected to begin on Sunday night US time.
US President Donald Trump previously confirmed that a deal with Iran had been completed, allowing the reopening of the Strait of Hormuz. - Mkini
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