Malaysia’s food prices may spike 50% amid fuel surge

Traders say the cost of raw materials used to prepare everyday staples, such as the popular nasi lemak (rice and meat served on pandan leaf with spicy chili paste) has already climbed sharply, leaving little room but to pass on the increases to consumers.

“Even before the fuel price increase, prices had already risen by around 20% to 30%,” said Rosli Sulaiman, president of the Federation of Malaysian Hawkers and Traders Associations, as reported by The New Straits Times.

“When costs are high and there are no profits in return, traders are forced to raise their selling prices, even with only a small margin. Those most affected are small traders, hawkers and the public.” he said.

Earlier last week, the Malaysian Muslim Restaurant Owners Association (Presma), which represents the country’s popular 24-hour eateries operated by the Indian-Muslim community, said it had already faced cost increases of up to 30% over the past year.

These hikes span raw ingredients such as chicken and vegetables, as well as plastic packaging and cooking gas.

“If these price pressures persist, a minimal adjustment in prices may be unavoidable,” Presma President Mosin Abdul Razak was quoted as saying by online news portal Free Malaysia Today.

Government data shows Malaysians spent more than MYR870 (US$216) a month dining out in 2024, a 17% increase from the previous year, reflecting a growing preference for eating out rather than cooking at home.

This spending accounted for more than 12% of the median monthly household income of MYR7,017.

However, analysts warn the country’s MYR60 billion food and beverage industry could face challenges sustaining growth if global crude oil prices – which reached $115 per barrel on Monday – remain elevated over a prolonged period.

Beyond higher energy and transport costs, the sector is also likely to be affected by fertilizer shortages impacting agriculture, as well as rising shipping and logistics expenses that could fuel imported inflation, said economist Doris Liew, a specialist in Southeast Asian development.

“For a trade-dependent economy like Malaysia, these second-round effects tend to be more persistent than the initial energy shock,” Liew told This Week in Asia.

While Malaysia’s targeted fuel subsidies may cushion households from immediate price shocks, Liew said they would do little to offset rising input costs for businesses, which are likely to be passed on to consumers.

This could dampen business sentiment and consumer confidence, potentially prompting both companies and households to hold back spending amid uncertainty.

“If the situation is prolonged, it could result in slower growth amid higher inflation,” said Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat, as reported by South China Morning Post.

“The government needs to assure its citizens that fuel and food supplies are sufficient and such claims need to be backed by data in order to gain the confidence of the public.”