KUALA LUMPUR, March 12 — MBSB Investment Bank Bhd (MBSB IB) anticipates that Malaysia’s retail sales expansion will remain resilient at 6.0 per cent for the year 2026 as compared to 6.1 per cent in 2025.
It said domestic consumption is expected to strengthen in the first quarter of 2026, bolstered by the Chinese New Year and Hari Raya Aidilfitri festivities.
“(The higher consumption was also supported by) increased disposable income from the Public Service Remuneration System (SSPA) Phase 2 salary adjustments, and government cash transfers, including the Phase 2 Sumbangan Tunai Rahmah (STR) payments in March 2026,” MBSB IB said in a note today.
Malaysia’s domestic engine remains a primary pillar of growth, supported by a healthy labour market, wage gains, stable inflation, and a tourism recovery ahead of Visit Malaysia 2026.
“While there could be some negative impacts from the (West Asia conflicts), the tourism sector remains resilient due to its lower reliance on long-haul travellers.
“However, a challenging inflation outlook — as energy costs filter through transportation and logistics — may eventually temper consumer sentiment,” it said.
Furthermore, given these uncertainties, the government may pause fiscal consolidation and targeted adjustments to subsidies for essentials to limit the impact on inflation.
Meanwhile, on the price outlook, MBSB IB said energy prices are projected to rise as the United States-Iran conflict drives a surge in commodity markets.
Higher oil prices may complicate the inflation outlook, as energy costs typically filter through transportation, shipping, and various consumer goods.
“Sustained crude gains can inflate headline inflation even if underlying pressures are stable; the spikes in oil prices are likely temporary and should abate once geopolitical tensions cool.
“Hence, we continue to anticipate a potential mild uptick in inflation to 1.8 per cent in 2026, which should remain broadly supportive of household consumption and domestic demand,” it added.
