Malaysian households are expected to enjoy purchasing power that is 18% higher than pre-pandemic levels by 2026, supported by rising real wages and easing inflation, according to BMI Country Risk & Industry Research (BMI), a unit of Fitch Solutions.
In its latest Malaysia Consumer Outlook report, BMI said stronger purchasing power is expected to support consumer spending and drive retail sector growth this year.
The research house said a tight labour market and moderating inflation have led to real wage growth, boosting households’ disposable income.
Consumer spending set to strengthen
BMI expects average household earnings to grow by 2.8% annually in real terms after accounting for medium-term inflation, which is projected to average 2.1% through 2030.
The research firm forecast household spending to increase by 4.2% year-on-year in real terms to RM1.10 trillion in 2026, before rising another 4.1% to RM1.14 trillion in 2027.
It attributed the positive outlook to stable economic growth, manageable inflation and continued resilience in the labour market.
BMI expects Malaysia’s inflation to average 1.9% in 2026, while the unemployment rate is forecast to remain at 3.1%, supported by foreign investment, the recovery in tourism and sustained activity in key industries such as manufacturing and electronics.
The report also highlighted continued strength in the retail sector, with retail sales recording 7.2% year-on-year growth in May 2026.
Household debt remains a key concern
Despite the optimistic outlook, BMI warned that elevated household debt remains a significant risk to consumer spending.
It said high household debt limits future borrowing capacity while reducing current disposable income available for spending.
According to Bank Negara Malaysia’s latest estimate, household debt stood at 69.8% of gross domestic product (GDP) in the fourth quarter of 2025.
BMI added that Bank Negara’s decision to maintain the overnight policy rate at 2.75% should help keep debt servicing costs stable and support household spending.
The research house also expects the ringgit to strengthen slightly against the US dollar, from RM4.30 in 2025 to RM4.10 in 2026, making imported goods more affordable for consumers.
BMI forecast Malaysia’s real GDP to grow by 4.3% in 2026 and 4.0% in 2027.
