GOVT FORECASTS MODERATE INFLATION INCREASE OF 2.0-3.5 PCT IN 2025 -- MOF

KUALA LUMPUR, Feb 20 (Bernama) -- The government projected the inflation rate in 2025 to increase moderately between two per cent and 3.5 per cent, said the Ministry of Finance (MOF).

The ministry explained that this projection took into account various key factors, including inflation trends for the main components of the Consumer Price Index (CPI), particularly the inflation of the food and beverage group, which contributes 29.8 per cent of the overall CPI weight.

“This projection also considers changes in global commodity prices and the implementation of several domestic policies such as the increase in the minimum wage rate, restructuring of the civil servant salary scheme, targeted petrol fuel subsidies, and the expansion of taxable services scope and changes in the service tax rate from six per cent to eight per cent,” it said in a written response to the Dewan Rakyat posted on the Parliament’s website on Thursday.

The ministry was responding to Wan Ahmad Fayhsal Wan Ahmad Kamal (PN-Machang) on whether the government’s inflation outlook for 2025 took into consideration that food and beverage inflation increased to 2.6 per cent in November 2024 compared to 2.3 per cent the previous month, with the food and beverage group contributing 29.8 per cent of the overall CPI weight.

MOF elaborated that the trend of price growth for the food and beverage group, which is the main contributor to the CPI with a weight of 29.8 per cent, has shown a significant decline since 2022, from 5.8 per cent (2022) to 4.8 per cent (2023) and then to 2.0 per cent (2024).

It said that in the subgroup of food at home, which measures price changes in raw food items such as rice, meat, fish, and chicken, inflation for this sub-group in October and November 2024 showed a moderate increase of 0.6 per cent for both months.

“This proves that measures taken by the government, such as the targeted subsidy policy, price control, and monitoring and enforcement by the Ministry of Domestic Trade and Cost of Living (KPDN), have successfully helped stabilise food prices,” it said.

MOF added that expected stability in the prices of major global commodities would reduce inflationary pressure despite uncertainties in the global environment.

“Brent crude oil is projected to range between US$75 and US$80 per barrel in 2025, while crude palm oil prices are expected to be between RM3,500 and RM4,000 per ton during the same period,” it said.

MOF said that the government would continue to monitor price developments and take proactive steps to ensure inflation remains controlled and does not burden the people.

“Strategic measures such as targeted subsidies, price controls, and cash assistance will continue to alleviate the cost of living pressures and preserve the well-being of the people,” it added.-- BERNAMA