Malaysia: CPI undershoots modestly in May: ...but solid growth to prompt BNM hike in 4Q26

Research evidence excerpt

Malaysia: CPI undershoots modestly in May: ...but solid growth to prompt BNM hike in 4Q26

J P M O R G A N Asia Pacific Economic Research

19 June 2026

Malaysia: CPI undershoots

modestly in May

...but solid growth to prompt BNM hike in 4Q26

CPI undershoots expectations on soft core reading...: Malaysia’s headline Economic Research

inflation rose less than expected from 1.9%oya in April to 2%oya in May (J.P. Siddharth Jamad

Morgan and consensus: 2.1%oya). Meanwhile, the BNM’s preferred gauge of core (65) 6807-5503

inflation (excluding volatile fresh food and administered prices) slid from 2.2%oya siddharth.jamad@jpmorgan.com

to 2%oya (Table 1). In seasonally adjusted terms, headline, BNM core and JPMorgan Chase Bank, N.A., Singapore Branch

traditional core (excluding all food and energy) CPIs alike held flat last month, and

both core indices’ 3m/3m momentum held close to a benign 2.5%ar (Figure 1).

...reflecting slower rental inflation: While price growth was benign across the

core basket, a drop in rental inflation particularly contributed to the softer-than-

expected May core reading. On a seasonally adjusted basis, the rental CPI—which

has a large 17.7% weighting in the CPI—held flat last month, and its year-ago

growth slipped from 1.5%oya to 1.4%oya (Figure 2).

Energy prices also stabilized in May: Despite the sharp increase in global energy

prices up until the recent US-Iran deal, Malaysia’s energy CPI only rose an average

3%m/m in March and April. Underpinning this relative stability were broad-based

fuel subsidies for the widely used RON95 petrol as well as targeted diesel subsidies

for the transportation sector, which likely helped forestall a spillover of higher fuel

prices into the core basket. With Brent crude prices stabilizing at US$100/bbl in