Malaysia Consumer Price Index - 26 June 2023

Eased to sub-3.0% for the first time in a year in May due to favourable base effect

The headline inflation continued to trend down for the sixth consecutive month, easing to 2.8% in May (Apr: 3.3%), a 12month low. It was below market consensus and our expectation (Consensus: 3.0%; KIBB: 2.9%)

  • The slowdown in CPI can be primarily attributed to a decrease in transport and communication services costs, as well as the high base effect. However, it should be noted that prices for food, rental, and restaurant & hotel services have increased.
  • However, on a MoM basis, inflation registered a slightly faster expansion at 0.2% (Apr: 0.1%), driven mainly by a rebound in food prices and higher rental costs.
  • Even though core inflation cooled further to 3.5% YoY (Apr: 3.6%), the component recorded a 0.3% MoM increase due to higher core food and housing costs.

Softer growth in consumer prices led by the indices of transport and food & non-alcoholic beverages

  • Transport (1.0%; Apr: 2.3%): slowed to a 27-month low due to a sharp moderation in transport services costs (6.7%; Apr: 13.5%). On a MoM basis, the index contracted by -0.2% (Apr: 0.3%) due to sharp fall in the cost of air transport (-8.3%; Apr: 3.8%) as over 17.0k flight tickets to Sabah, Sarawak were capped at RM300.0 during the festivities (27-31 May).
  • Food & non-alcoholic beverages (5.9%; Apr: 6.3%): eased to below 6.0% for the first time since May 2022. However, food inflation trended upward on a MoM basis (0.5% MoM; Apr: -0.1%) due to a spike in the prices of food away from home.
  • Housing, water, electricity, gas & other fuels (1.8%; Apr: 1.6%): rose due to a 0.6% MoM increase in rental costs.
  • Restaurant & hotel (6.7%; Apr: 6.6%): edged higher after two straight months of moderation. This can be mainly attributed to a sharp rebound in hotel rates (2.1% MoM; Apr: -1.5%).