Economy minister says inflation still moderate despite Hormuz disruption, but food and logistics costs under pressure

KUALA LUMPUR, June 22 — Malaysia’s inflation remains moderate despite global trade disruptions linked to tensions in the Strait of Hormuz, although cost pressures are rising across key sectors, Economy Minister Akmal Nasrullah Mohd Nasir said today.

In the Dewan Rakyat today, he said the latest data for May showed inflation at 2.0 per cent, slightly higher than 1.9 per cent in April, indicating that price pressures remain contained for now.

However, Akmal said cost pressures were rising across several key sectors.

"The sectors most exposed include logistics, agriculture, food production, manufacturing, chemicals, plastics, packaging and pharmaceuticals.

“Global maritime freight costs have nearly doubled, while insurance costs increased by as much as sixteen times during the peak of the crisis," he said during the oral answer session.

He was responding to a question from Betong MP Datuk Dr Richard Rapu @ Aman anak Begri on the latest impact of trade disruptions in the Strait of Hormuz on local industries, especially operating costs, and the national inflation rate for the second quarter of 2026.

Within the agriculture and food sectors, Akmal said 63 per cent of Malaysia’s fertiliser requirements depend on imports.

Based on current assessments, he said fertiliser costs are expected to increase by between 15 per cent and 20 per cent, while livestock feed costs are projected to rise by around 8 per cent.

He added that these increases could translate into higher food production costs in the coming quarters if disruptions persist.

On the labour market, Akmal said conditions remain stable for now, with the labour force participation rate at 70.9 per cent.

"The unemployment rate stood at 2.9 per cent in March and 3.0 per cent in April. If the crisis continues, it could affect employment, household incomes and corporate investment decisions," he said.

To mitigate risks, he said the government is focusing on four key intervention areas: protecting the rakyat, stabilising supply and prices, supporting businesses, and strengthening long-term economic resilience.

He said these include programmes such as Sumbangan Tunai Rahmah (STR), Budi Madani, the Subsidised Diesel Control System (SKDS), and Sumbangan Asas Rahmah (SARA).

He added that the government is working with Petronas and industry players to ensure energy supply stability while diversifying raw material sources, alongside initiatives such as Rahmah Sales programmes.

On business support, Akmal said RM5 billion has been allocated under the SME Stability Financing Facility, with a further RM5 billion in guarantees through SJPP-related schemes.