Rising oil shock lifts Malaysia’s April inflation to 1.9%; lower than regional peers

 

MALAYSIA’S CONSUMER Price Index (CPI) rose by 1.9% year-on-year (YoY) in April 2026, accelerating from 1.7% YoY in the previous month and coming in line with market expectations. 

The higher inflation reading was attributed to the oil price shock during the month, driven by escalating geopolitical tensions involving Iran, the US, and Israel. 

“On a month-on-month basis, CPI increased by 0.4%, suggesting continued inflationary pressures, which we believe were largely driven by supply-side factors,” said TA Securities (TA).

Headline inflation has so far stayed largely manageable, although indications of wider cost transmission and persistent supply-side pressures began surfacing last month, slowly feeding into broader price trends.

Over a longer timeframe, Malaysia recorded an average inflation rate of 2.1% between January 2008 and April 2026, indicating that current inflation levels remain below the historical norm and still point to a relatively moderate price environment.

On a three-month moving average basis, headline inflation increased by 1.7% YoY, edging up by 0.1 percentage point from the previous reading.

Core CPI rose by 2.0% YoY in April 2026 (Mar 26: 2.1% YoY), indicating that underlying price pressures remain relatively contained despite the uptick in headline inflation.

Eight states recorded increases above the national inflation level, namely Pahang (2.8% YoY), Wilayah Persekutuan Labuan (2.7% YoY), Negeri Sembilan (2.5% YoY), WP Kuala Lumpur (2.5% YoY), Johor (2.4% YoY), Sabah (2.1% YoY), WP Putrajaya (2.1% YoY) and Selangor (2.0% YoY). 

However, the remainder eight states recorded increases below and equal to the national inflation rate, with Sarawak registered the lowest inflation (0.4% YoY) in April 2026.

In comparison to inflation in other selected countries, inflation in Malaysia during the month was lower than inflation in Philippines (7.2% YoY), Vietnam (5.5% YoY), Thailand (2.9% YoY), Republic of Korea (2.6% YoY) and Indonesia (2.4% YoY).

However, the rate was higher than China (1.2% YoY). Looking ahead, any de-escalation or resolution of the conflict is unlikely to result in an immediate normalisation of oil prices. 

Instead, Brent crude prices are expected to adjust gradually, as global supply chains, shipping routes, and inventory levels would require time to stabilise and rebuild following the period of heightened geopolitical risk.

“On the policy wise, we also maintain the Overnight Policy Rate to be a 2.75% throughout this year,” said TA. — Focus Malaysia