HEADLINE inflation inched down to +1.9% year-on-year (YoY) in Jun (May: +2.0%), marginally below median consensus estimate of +2.0%.
On a month-to-month (MoM) basis, headline consumer price index flattened to +0.0% following a marginally a steeper decline in personal care (-0.9%) and transport (-0.8%), coupled with softer price momentum across food & beverages (+0.2%), housing, utilities & other fuels (+0.2%) and restaurants & hotels (+0.1%).
On a YoY basis, the slight moderation was attributable to easing transport (+2.8%) and personal care (+3.4%), offsetting the acceleration in information & communication (+2.4%), restaurants & hotels (+2.6%), housing, utilities & other fuels (+1.4%), as well as insurance & financial services (+5.7%), particularly health insurance (+16.7%).
“The transport index decelerated to +2.8% due to softer inflationary pressures from operation of personal transport equipment (+3.1%) and public transport services (+6.5%),” said Hong leong Investment Bank (HLIB).
On a MoM basis, the transport index contracted at a marginally faster pace of -0.8%, mirroring the decrease in monthly average Brent oil prices (USD84.43/bbl, May: USD103.71/bbl).
Food prices rose at a steady pace of +1.4%, as moderation in ‘food away from home’ (+2.4%) offset the pickup in ‘food at home’ (+0.5%).
Upward price pressures from cereals & cereal products (+0.2%), meat (+1.5%), ready-made food (+0.6%) and milk, dairy & eggs (+0.1%) were offset by disinflation in fish & other seafood (+1.4%) and steeper contraction in vegetable prices (-1.8%).
On the global front, food prices eased to +1.7% YoY, on the back of weaker inflation in dairy, sugar, meat and cereals.
Meanwhile, services inflation remained stable at +2.4%. Meanwhile, core inflation ticked down to +1.9%, reflecting moderation in personal care (+3.4%) and education (+2.1%).
Separately, producer prices (PPI) picked up to +7.8% YoY in May, marking the highest level since Jun-22, as mining PPI remained elevated at +52.6%.
Notably, food PPI registered its first YoY increase in 6 months (+2.2%). Concurrently, computer, electronic and optical products steepened to +5.7%.
The renewed blockade of the Strait of Hormuz has driven the Brent crude oil benchmark back above USD80/bbl, reversing the temporary price relief below USD75/bbl that followed the ceasefire announcement.
While the external headwinds could exacerbate the risks of pass-through to broader price levels through the second half of 2026, Malaysia’s inflation trajectory remains insulated by both fiscal policy (BUDI95 and BUDI Diesel subsidies) and diversification of hydrocarbon supply.
As such, HLIB maintains their 2026 CPI forecast at +2.0%.— Focus Malaysia
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