Malaysia Inflation Inches Higher as CPI Reaches 2.0% in May

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Malaysia’s inflation rose to 2.0% in May 2026, while core inflation remained stable, reinforcing expectations that Bank Negara Malaysia will keep interest rates unchanged this year.

Malaysia Inflation

Malaysia’s inflation rate edged higher in May 2026, with headline Consumer Price Index (CPI) growth rising to 2.0% year-on-year from 1.9% recorded in April. Meanwhile, core inflation remained unchanged at 2.0%, indicating that broader underlying price pressures continue to stay relatively contained despite increases in selected categories.

The latest data suggests that domestic inflation remains manageable, supporting expectations that Bank Negara Malaysia (BNM) will maintain its Overnight Policy Rate (OPR) at 2.75% throughout 2026. Economists continue to forecast full-year inflation at 2.4%, reflecting a gradual increase in price pressures without signs of a significant surge.

While government fuel subsidies are expected to cushion households from direct energy-related cost increases, concerns remain over potential spillover effects into food, utility and transportation costs during the second half of the year. External cost pressures and global economic uncertainties could also contribute to a less favorable inflation outlook.

For now, stable core inflation provides policymakers with room to keep monetary policy unchanged. However, BNM is expected to closely monitor developments, particularly if price increases become more widespread across the economy.

Any broad-based acceleration in inflation could prompt a reassessment of the current policy stance in the months ahead.