BMI maintains positive outlook for consumer spending in Malaysia over 2025, 2026
With inflation averaging lower than expected in May, BMI lowered its forecast for headline inflation to an average of 1.9 per cent year-on-year (y-o-y) in 2025, down from 2.1 per cent previously, and only slightly up from an average of 1.8 per cent in 2024.
It noted this remained low enough to support household purchasing power.
Overall, the firm forecasted household spending to grow by 3.8 per cent y-o-y over 2025, in real terms, to a value of RM930.7 billion, up from RM896.9 billion in 2024.
"As a result, household spending has returned close to pre-COVID levels of growth, where it grew at a real average rate of 5.2 per cent y-o-y during the 2015-2019 period.
"However, spending will continue to be restrained by Malaysian consumers' high levels of indebtedness and the correspondingly high debt servicing costs," it said in its latest "Malaysia Consumer Outlook: Strong Growth Forecast Over 2025 and 2026".
Looking ahead to 2026, BMI expected consumer spending to accelerate, underpinned by strong gross domestic product growth and a stable employment outlook.
It said consumer confidence and willingness to spend would be further supported by a stable inflationary environment and the Bank Negara Malaysia returning to a loosening mode, cutting its benchmark interest rate by a further 25 basis points from a forecast of 2.75 per cent in December 2025 to 2.50 per cent by end-2026.
"Across the year, therefore, we forecast total household spending growth in Malaysia of 5.0 per cent y-o-y in real terms, taking spending to RM977.3 billion," it said.
BMI said that over the 2025-2029 forecast period, solid household incomes and tourism-related retail sales would further support a steady uptick in spending.
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