Malaysia’s Inflation Slows to 1.5% in February 2025 as Food and Housing Costs Stabilise
Malaysia’s headline inflation cooled to 1.5% year-on-year in February 2025, offering a sign of relief for consumers and businesses navigating cost-of-living pressures. The data, released by the Department of Statistics Malaysia (DOSM), shows that inflation has slowed from 1.7% in January, in line with Bloomberg’s median estimate.
This deceleration is largely attributed to steady food prices, moderating housing and utilities costs, and softening transport charges, all of which are core contributors to the nation’s consumer price index (CPI).
Breakdown of February 2025 CPI Components
🥥 Food & Beverages: Stabilising with Modest Increases
Food remains the largest CPI component, accounting for nearly 30% of the index. In February:
- Food and non-alcoholic beverages inflation held steady at 2.5% y-o-y.
- Food at home prices increased 0.5%, slightly up from January’s 0.4%, mainly due to higher prices for fresh and instant coconut milk.
- Food away from home inflation eased to 4.6% from 5.0%, reflecting lower pressure on dining costs for consumers.
The flattening of food inflation is a positive sign for household budgets, particularly as food costs have been a major concern in previous months.
🏘️ Housing, Utilities & Fuels: Slower Growth but Rising Rents
The CPI group covering housing, water, electricity, gas, and other fuels rose 2.3% y-o-y, a moderation from 2.8% in January. Key contributors to this change:
- Maintenance and repair costs eased, helping bring down the overall index.
- Rental prices, however, climbed to 2.3% from 1.7%, indicating growing demand and tightening housing supply in urban areas.
For landlords and property investors, the rise in rents presents an opportunity for higher yields, though developers and tenants may feel pressure from this upward trend.
🚗 Transport: Stable Despite Diesel Price Surge
Inflation in the transport category dipped to 0.7% from 0.9%, driven by:
- A reduction in public transport service costs.
- A contrasting 19% year-on-year surge in diesel prices in Peninsular Malaysia.
Although fuel prices spiked, they were offset by broader cost reductions across public transport, allowing this segment to contribute less to headline inflation.
📈 Core Inflation and Monthly Trends
- Core inflation, which excludes volatile and government-controlled prices, rose slightly to 1.9% from 1.8% in January. This indicates persistent underlying price pressures, particularly in essential goods and services.
- On a month-on-month basis, the overall CPI increased by 0.4%, in line with seasonal and economic expectations.
Outlook for 2025: What to Expect
The Ministry of Finance (MOF) has projected headline inflation to range between 2.0% and 3.5% for 2025, taking into account:
- Normalisation of global supply chains
- Wage adjustments under new labour policies
- Continued volatility in energy prices and geopolitical dynamics
Meanwhile, Bank Negara Malaysia (BNM) is expected to release its updated annual report and revised inflation outlook later this month. Its current monetary stance, with the Overnight Policy Rate (OPR) at 3%, remains accommodative to support sustainable economic growth amid manageable inflation.
How This Impacts Malaysians
For Consumers:
- Slower inflation offers relief from high living costs.
- Stable food and transport prices make household budgeting more predictable.
For Businesses:
- Lower input cost inflation supports better profit margins.
- Firms may cautiously adjust pricing and wage strategies in tandem with inflation trends.
For Property Investors:
- Rising rents and moderated construction costs could enhance returns.
- Developers may find encouraging conditions for mid-range housing segments, particularly in urban hubs.
Final Thoughts
Malaysia’s 1.5% inflation rate in February 2025 signals a promising trend of price stability, aided by recovering global supply chains, domestic policy interventions, and moderate consumer demand.
As the nation steers toward macroeconomic resilience, consumers and businesses can look forward to a more stable cost environment, while policymakers remain watchful of external shocks. With core inflation showing mild persistence, the trajectory of monetary policy will remain key to sustaining consumer confidence and economic momentum throughout the year.
