KUALA LUMPUR, Oct 22 — Kenanga Investment Bank Bhd (Kenanga IB) has maintained its 2025 inflation forecast at 1.5 per cent (2024: 1.8 per cent), with targeted subsidy reforms expected to temporarily lift inflation to around two per cent in the fourth quarter of 2025 (4Q 2025).
It said that the growth momentum is set to strengthen in the second half of 2025 following a stronger-than-expected advance gross domestic product (GDP) reading for 3Q 2025.
"We now forecast GDP growth at 4.5 per cent in 2025, from 4.3 per cent previously. Despite lingering uncertainty over the United States' trade policy and broader geopolitical risks, the domestic impact remains limited.
“With inflation pressures still contained, Bank Negara Malaysia is expected to keep the policy rate unchanged at 2.75 per cent over the next nine to 12 months," Kenanga IB said in a note today.
It added that the inflation averaged 1.4 per cent in the first nine months of 2025 but is expected to edge higher in the final quarter.
Under the BUDI95 scheme, all Malaysian households are eligible for subsidised RON95 petrol, although the Finance Ministry estimates households account for only 78.0 per cent of total consumption. The remaining 22.0 per cent comprises usage by firms and foreign motorists.
Eligible companies will continue to receive subsidised fuel via the Subsidised Petrol Control System at RM2.05 per litre, while foreigners will pay the market rate of RM2.60 per litre.
"This mix implies an effective average RON95 price of about RM2.10 per litre, likely adding 0.2 to 0.3 percentage points to October inflation.
"While the spike should be short-lived, second-round effects from higher operating costs may persist," said Kenanga IB.
