Public Investment Bank Lowers 2025 CPI Forecast To 2.4 Percent on Soft Start To The Year
KUALA LUMPUR, March 24 (Bernama) -- Public Investment Bank Bhd (PIVB) has lowered its 2025 full-year Consumer Price Index (CPI) forecast to 2.4 per cent from 3.0 per cent previously.
This was in response to a softer-than-anticipated start to the year, with January and February inflation averaging just 1.6 per cent year-on-year (y-o-y), it said in a note today.
On Friday last week, the Department of Statistics Malaysia announced that headline CPI eased to 1.5 per cent y-o-y in February, down from 1.7 per cent in January.
PIVB said this early shortfall suggests a more subdued inflation path in the first half of 2025, pulling full-year expectations closer to the lower end of the official range of 2.0-3.5 per cent.
“While we continue to monitor domestic cost pressures expected from mid-year policy shifts, including adjustments to fuel subsidies, utility rates and labour-related levies, the recent trend points to a more gradual and possibly delayed pass-through.
“Momentum in core CPI has picked up modestly but remains contained, limiting evidence of broader inflation spillovers for now,” it said.
On the external front, PIVB said renewed trade policy risks following the US elections, coupled with ongoing forex and commodity market volatility, may introduce cost-side pressures in the second half of 2025 (2H 2025), although transmission will likely be uneven.
“We expect inflation to regain momentum in 2H 2025, albeit at a more moderate pace than previously projected, supporting a downward revision to our full-year forecast,” it said.
The investment bank said the key inflation drivers to watch this year are the targeted RON95 petrol subsidy rationalisation by mid-year, adjustments to the minimum wage, and an expanded scope for the Sales and Services Tax.
Further subsidy rationalisation on essential goods, potential electricity tariff adjustments in 2H 2025, as well as rising labour costs from mandatory Employees Provident Fund contributions for foreign employees and the multi-tier foreign worker levy could add to cost-push and demand-driven pressures on consumer prices, it added.
-- BERNAMA