Analyst: Malaysia's Diesel Subsidy Reform May Have Limited Impact on Inflation

According to Golden Ten Data on June 23, TA Securities analyst Shazma Juliana Abu Bakar stated in a report that Malaysia’s recent diesel subsidy reform is likely to have a minimal direct effect on inflation, as most eligible diesel users will continue to receive subsidized fuel and logistics operators will also be protected. Starting July 1, Malaysia will set diesel prices nationwide according to market rates, and eligible citizens will be able to purchase subsidized diesel at 2.10 ringgit per litre. The analyst expects transport costs and broader price pressures to remain within controllable limits, noting diesel accounts for only 0.2% of the Consumer Price Index (CPI) basket. She added that this reform should help maintain household purchasing power, but the overall impact on consumption could be limited due to the relatively small group of beneficiaries. TA Securities maintains its forecasts for Malaysia’s inflation rate at 2.1%-2.6% and GDP growth at 4.3%-4.7% for 2026.