Consumer Spending and Investment Behaviour under Persistent Inflation in Malaysia: Implications for Household Financial Security and SME Business Strategy: An Integrative Literature Review

Persistent, moderate inflation has reshaped how Malaysian households divide income between present consumption and investment. This paper applies an integrative review methodology, combining government statistics, institutional reports, consumer sentiment surveys, and peer-reviewed studies, to synthesise the relationship between inflation, consumer spending, and household investment behaviour in Malaysia between 2023 and 2026, and its implications for small and medium enterprises (SMEs). The review evaluates the strength of this heterogeneous evidence and analyses it through a constant-comparative process to build conceptual understanding rather than restate individual findings. Findings show that Malaysian headline inflation has remained comparatively low by regional standards (1.4 – 2.5 percent annually), yet consumer anxiety about the cost of living and financial security has strengthened. Households have trimmed discretionary spending, increased precautionary saving, and relied more heavily on the Employees Provident Fund as a retirement anchor, even as household debt remains high relative to GDP. These shifts are uneven across income groups, with the B40 and, increasingly, the M40 segment most vulnerable. For SMEs, cautious demand combined with rising costs has compressed margins and altered pricing and retention strategies. The review integrates these findings into a conceptual framework and synthesis matrix, and identifies gaps for future research.