RON95 Price Cut Seen Easing Inflation And Supporting Growth -- OCBC Research

KUALA LUMPUR, Sept 22 (Bernama) -- The RON95 petrol rationalisation plan, which sets the price of the fuel to RM1.99 from RM2.05 per litre starting Sept 30, 2025, is expected to contain inflationary pressures in the country and provide a boost to growth, said OCBC Global Markets Research.

It said the price cut of RON95 petrol will reduce annual inflation by 0.1 percentage points (pp), while headline inflation averaged 1.3 per cent year-on-year in January-July 2025. 

"Looking ahead, the water subsidy rationalisation will likely push up August and September inflation, but this will likely be offset by the 3.0 per cent cut to RON95, effective Sept 30, 2025. From a monetary policy perspective, we expect Bank Negara Malaysia (BNM) to keep its policy rate unchanged at its Nov 6 meeting," it said in a research note.

Meanwhile, CIMB Treasury and Markets Research expects the Department of Statistics Malaysia (DOSM) to adopt a volume-weighted approach in incorporating RON95’s tiered pricing, which would imply a slight deflationary effect on the Consumer Price Index (CPI).

It said the measure is viewed as broadly inflation-neutral, with Malaysians benefiting from the price cut, consistent with BNM’s guidance that domestic reforms will have a limited inflationary impact.  "We forecast headline inflation at 1.5 per cent in 2025 and 2.0 per cent in 2026, underscoring price stability and keeping real rates in positive territory," it added.

The Finance Ministry (MOF) has announced that Malaysians are eligible for a monthly subsidised ceiling of up to 300 litres of RON95 petrol under the BUDI MADANI RON95 (BUDI95) targeted subsidy programme. It also said e-hailing drivers are exempt from the ceiling and may apply for additional allocations to ensure their livelihoods are not affected.

-- BERNAMA