Headline inflation increased to 1.6% in December

• In December, headline and core inflation increased to 1.6% and 2.3% (November 2025: 1.4% and 2.2%) respectively. For 2025, headline inflation averaged 1.4%, while core inflation averaged 2%.
• Headline inflation rose partly due to higher electricity CPI amid lower discounts related to generation costs. Flood-related disruptions also contributed to a slight increase in prices of selected vegetables.
• Underlying inflation remained stable, with the increase in core inflation largely reflecting the dissipation of base effects from earlier declines in postpaid mobile prices.

Slower wholesale and retail trade growth in November

• The Index of Wholesale and Retail Trade (IOWRT) grew by 5.2% in November 2025 (October 2025: 5.7%). 
• All segments expanded, albeit moderately. Growth in the wholesale and retail segment was driven by wholesale trade in other specialised wholesale component^[1] and retail trade in non-specialised stores^[2].
• Meanwhile, growth in the motor vehicle segment remained high with continued car sales and higher sales, maintenance and repair of motorcycles.

Growth in credit to the private non-financial sector moderated slightly

• Credit to the private non-financial sector grew by 5.3% (November 2025: 5.5%), following slower growth in business loans (3.7%; November 2025: 5%), while growth in outstanding corporate bonds increased to 6.9% (November 2025: 5.5%).
• Growth in business loans moderated following slower loan growth among non-SMEs, while loan growth to SMEs was broadly sustained. Notwithstanding the moderation in growth, overall loan disbursements was higher in December.
• Household loan growth remained stable at 5.6% (November 2025: 5.7%) amid sustained loan growth across most purposes.

Banks’ liquid asset buffers remained adequate against potential liquidity shocks

• The banking system continued to record healthy liquid asset buffers with an aggregate Liquidity Coverage Ratio of 154.8% (November 2025: 145.6%).

Banks’ asset quality remained intact

• Gross impaired loans ratio continued to be stable at 1.4%, while net impaired loans ratio declined slightly to 0.9% (November 2025: 1%).
• Loan loss coverage ratio (including regulatory reserves) remained prudent at 128.7% of gross impaired loans (November 2025: 124.6%).

Domestic financial markets were primarily influenced by further US monetary policy easing

• Global financial conditions remained largely shaped by the US Federal Reserve’s (Fed) monetary policy trajectory following its rate cut in December and market expectations of further easing in 2026.
• Amid this backdrop, the ringgit appreciated by 1.8% against the US dollar (NEER: 1%; regional average^[3]: 0.9%), underpinned by foreign inflows into the domestic bond market.
• The 10-year MGS yields increased marginally by 2 bps (regional average³: -1.7 bps), following higher issuances of Government securities. Meanwhile, the FBM KLCI increased by 4.7% (regional average³: 2.5%) amid sustained demand from domestic institutional investors.

Monthly Highlights [PDF]

^[1] Other specialised wholesale component includes petrol, lubricants, metals, paints, construction materials, as well as fittings and fixtures.

^[2] Refers to supermarkets and department stores.

^[3] Regional countries comprise Singapore, Thailand, Philippines, Indonesia and South Korea.