Malaysia inflation rises 1.8 percent in July 2026

KUALA LUMPUR, 17 AUGUST 2026 —

Malaysia’s Inflation Eases to 1.8% in July 2026 as Transport Costs Moderate

The Consumer Price Index (CPI) rose to 137.1 from 134.7 in July 2025, according to the Department of Statistics Malaysia (DOSM). While transport inflation eased significantly to 1.4% from 2.8% the previous month, several other categories continued to see steady increases, reflecting persistent cost-of-living pressures.

The slowdown in transport was driven by a moderation in private vehicle maintenance costs, which rose 1.3% in July compared with 3.1% in June. Public transport services remained elevated at 6.5%, unchanged from the prior month, while goods transport services and vehicle purchases continued to decline, contracting 1.3% and 0.2% respectively. Fuel prices also contributed to the easing trend, with average market prices for RON97 petrol falling to RM4.07 per litre from RM4.33 in June, and diesel dropping to RM4.14 from RM4.50.

A targeted diesel subsidy programme, BUDI Diesel, launched on July 1, is credited with helping curb transport inflation. The initiative allows eligible private diesel vehicle owners to purchase subsidised diesel at RM2.10 per litre using MyKad verification. The government estimates the programme will benefit about 400,000 private diesel vehicle owners in Peninsular Malaysia and 300,000 in Sabah, Sarawak and Labuan.

Food and non-alcoholic beverages, which account for 29.8% of the CPI basket, rose 1.8% in July, up from 1.4% in June. The increase was led by both dining out (2.5%) and food consumed at home (1.2%), reversing a trend of subdued price growth in the latter category. Overall, 65.3% of the 573 items tracked by DOSM recorded price increases in July, though 98.1% of those increases were below 10%, with only seven items exceeding that threshold.

Core inflation, which excludes volatile food and energy prices, remained elevated at 2.9%, down slightly from 3.4% in June. Categories such as personal care, social protection and miscellaneous goods and services, as well as restaurants and accommodation services, also showed moderation, rising 2.9% and 2.0% respectively. Meanwhile, information and communication costs surged 3.4%, reversing a 2.4% rise in June, while housing, water, electricity, gas and other fuels increased 1.8%, up from 1.4%.

Regional disparities persisted, with seven states recording inflation above the national average of 1.8%. Negeri Sembilan led at 2.5%, followed by Kedah and Pahang at 2.3%, Kuala Lumpur at 2.2%, Johor at 2.1%, Labuan at 2.0%, and Sabah at 1.9%. All states except Kelantan and Labuan reported higher food and beverage inflation, though Labuan showed no change in food prices.

Economists say the mixed inflation picture reflects the dual impact of global commodity price volatility and domestic policy interventions. “The BUDI Diesel programme has clearly helped stabilise transport costs, but food inflation remains a concern due to supply chain and wage pressures,” said an economist at a local bank, who requested anonymity.

Looking ahead, the government is expected to maintain targeted subsidies while monitoring core inflation closely. With global oil prices remaining volatile and domestic demand gradually recovering, policymakers face a delicate balancing act between supporting households and managing fiscal sustainability.

For now, the inflation trend suggests a stabilising environment, but the persistence of food and services inflation indicates that cost-of-living challenges are far from resolved.

Related: Kuala Lumpur