KUALA LUMPUR (July 17): Economists are maintaining Malaysia’s headline inflation forecast at 2.1% after the June consumer price index (CPI) eased slightly amid a smaller rise in transport costs.
RHB Research and Kenanga Research noted on Friday that the 1.9% year-on-year rise in the June CPI inflation was lower than their in-house projections of 2.1% and Bloomberg’s consensus estimates of 2.0%. The May CPI was 2.0%.
They noted that while food and utility costs edged higher, lower fuel prices pulled transport inflation down.
"We maintain our 2026 headline inflation forecast at 2.1%, compared with year-to-date inflation of 1.7%," RHB Research said in a note. In 2025, inflation was 1.4%.
"Recent data indicate a broad-based increase in producer prices across major sectors, suggesting that upstream cost pressures are gradually building. At the same time, we remain vigilant to evolving geopolitical developments and their potential impact on global oil supply and commodity prices," RHB Research said.
It pointed out that renewed US-Iran tensions and the risk of disruptions to the Strait of Hormuz have heightened upside risks to Brent crude oil prices.
"While these developments could exert additional cost pressures, domestic policy measures, stable demand conditions and a gradual pass-through to consumer prices should help keep inflation contained. As such, we expect the impact on both headline and core inflation to remain gradual and manageable," said the research house.
In a separate note, Kenanga Research said it was maintaining its 2026 inflation forecast at 2.1% "as the recent easing in geopolitical tensions offers only temporary relief to energy markets and risks stay skewed to the upside".
It said the resumption of US-Iran hostilities has renewed concerns over potential supply disruptions and prolonged market tightness.
A sustained blockage or escalation could drive up higher energy, freight and input costs, creating broader inflation spillovers through transport and food prices, it added.
On the domestic front, Kenanga Research said inflation remains manageable, supported by targeted subsidies such as Budi95 and BudiDiesel, which continue to shield most households from immediate fuel price volatility. The research house warned, however, that prolonged disruptions to energy markets could still raise logistics and production costs, creating delayed pass-through effects, particularly for food prices.
"Weather-related disruptions, including the risk of a stronger El Nino, remain an additional upside risk to global food inflation," it added.