KUALA LUMPUR — Malaysians are expected to keep spending steadily over the next two years, but rising food and fuel prices and heavy household debt could take the shine off.

BMI, a country risk and industry research unit of Fitch Solutions, said in its latest outlook today that consumer spending in Malaysia looks broadly positive.

One reason is that jobs remain plentiful, with unemployment at 3.1 per cent, it said.

Prices are also rising slowly, with inflation easing to 1.8 per cent in September from 1.9 per cent in August.

That is comfortably below the upper end of Bank Negara Malaysia’s (BNM) target range of 1.5 per cent to 2.5 per cent.

After taking price rises into account, BMI expects household spending to grow 4.08 per cent in 2026 and 4.07 per cent in 2027.

That would put spending 31.2 per cent higher this year and 36.6 per cent higher in 2027 than before the Covid-19 pandemic.

Stronger oil income and Petronas dividends should help Putrajaya’s finances, BMI said.

Households, however, will feel the pinch from tighter government spending policies and rising living costs.

Higher food and fuel prices are the biggest worry, as food and non-alcoholic drinks make up 25.5 per cent of household spending.