KUALA LUMPUR, Nov 15 — Malaysia's inflation stayed stable in the third quarter (Q3) this year despite the government’s diesel subsidy rationalisation, said Bank Negara Malaysia (BNM) Datuk Seri Abdul Rasheed Ghaffour today.

He attributed this to the effective enforcement and mitigation measures to reduce the impact on businesses.

"Both headline and core inflation remain stable at 1.9 per cent. While there were pockets of higher inflation for selected items such as diesel and vehicle insurance, this was offset by broader moderation for food and beverages inflation during the quarter.

"Of note, the stable underlying inflation during the quarter continues to suggest limited spillover to broader prices from the diesel subsidy rationalisation that was implemented in June, which we largely attribute to effective enforcement and mitigation measures to minimize the cost impact on businesses,” he said in a joint press conference with the Department of Statistics Malaysia at Sasana Kijang here.

Higher inflation was noted for diesel at 20.1 per cent (up from 5.3 per cent in Q2 2024) and vehicle insurance at 0.8 per cent (compared to -0.1 per cent in Q2 2024).

However, this was offset by a broader moderation in food and beverage inflation at 1.6 per cent (down from 1.9 per cent in Q2 2024), especially in categories like dining out, cereals, and fresh vegetables.

Overall, the share of Consumer Price Index (CPI) items recording monthly price increases was lower at 38.9 per cent during the quarter (48.4 per cent in Q2 2024).

Year to date, Abdul Rasheed said both in headline and core inflation averaged 1.8 per cent and are expected to remain the modest for the remainder of the year.

Abdul Rasheed said the inflation rate for next year is projected to average between 2.0 per cent and 3.5 per cent, after factoring in the proposed RON95 subsidy rationalisation and expansion of the Sales and Service Tax (SST).

Abdul Rasheed added that the outlook remains contingent on extent of spillovers from further domestic policy measures to deployment prices as well as lingering risk from external developments which attract global commodity prices while disrupt global supply conditions.

"On the downside, lower domestic inflation could result from the weaker than expected global growth which could weigh on global commodity prices and domestic economic emissions through weaker external demand,” he said.

Earlier, Chief Statistician Datuk Seri Mohd Uzir Mahidin announced that Malaysia’s gross domestic product (GDP) grew 5.3 per cent in Q3 this year.

He explained that the growth is driven by strong investment activity and continued improvement in exports.