Inflation picks up in September from August

Latest reading: Consumer prices continued rising in September, recording a 1.5% increase on a year-on-year basis in the last month of Q3, following a 1.3% rise in August. Relative to the previous month's figures, there were higher price pressures for food and non-alcoholic beverages (+2.1% on a year-on-year basis vs +2.0% in August), housing and utilities (+1.5% vs +1.2% in August) and transportation (+0.7% vs +0.2% in August). Finally, recreation and culture prices rose at the same rate as in the prior month (+0.9% in September and August). Meanwhile, core inflation increased to 2.1% in September 2025 from 2.0% in August. Overall, Q3 inflation stood at 1.3%, unchanged from the prior quarter. Lastly, consumer prices increased 0.22% in September in month-on-month terms, following a 0.15% increase in the prior month.

Outlook: Most panelists expect the average inflation not to exceed last year’s level in 2025 and to remain in line with Bank Negara Malaysia’s forecast. Despite a slight uptick next year, price pressures are also set to remain muted overall in 2026, capped by a stronger ringgit vs the USD and softer commodity prices.

Panelist insight: Analysts at the EIU commented: “Inflation in Malaysia will average 1.5% in the fourth quarter of 2025, up from 1.3% in July-September. This reflects higher gold prices, a 10% excise duty rise on tobacco and alcohol from November, and base effects from low inflation levels in 2024. This will be offset in part by lower electricity costs resulting from a rise in rebates, as well as lower petrol prices due to continued subsidies on RON95 petrol.”

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