Malaysia’s headline inflation edged up to 2.0% in May 2026 from 1.9% in April, mainly driven by higher electricity prices following a surcharge linked to increased generation costs, according to Bank Negara Malaysia (BNM).
In its Monthly Highlights, BNM said core inflation remained unchanged at 2.0% during the same period, indicating that underlying price pressures were broadly stable despite the uptick in headline inflation.
The central bank noted that the rise was largely influenced by non-core items, particularly vegetables and electricity. It said the increase in electricity tariffs reflected a surcharge imposed after higher generation costs, although this was partly offset by lower inflation in domestic air travel and retail fuel prices, especially RON97 and diesel.
Beyond inflation, BNM reported that credit to the private non-financial sector grew 6.4% in May, up from 5.8% in April, supported mainly by stronger business borrowing. Outstanding corporate bonds rose 8.0% compared with 6.2% previously, while business loans increased 7.0%, driven largely by working capital needs.
Household borrowing remained steady, with loan growth unchanged at 5.5% as lending across most purposes continued at a stable pace.
On the real economy front, the Manufacturing Industrial Production Index expanded 8.3% in April compared with 5.5% in March. Export-oriented industries grew 8.5%, supported by stronger output in electrical and electronics as well as refined petroleum and chemical products.
Domestic-oriented production also strengthened to 8.0% from 2.8% previously, lifted by higher output of motor vehicles, food processing and construction-related materials.
BNM said Malaysia’s banking system remained resilient, with gross and net impaired loan ratios unchanged at 1.4% and 1.0% respectively, supported by stable credit conditions. Liquidity levels also remained strong, with the banking system’s Liquidity Coverage Ratio at 149.2%.
In financial markets, the ringgit appreciated slightly by 0.1% against the US dollar, while the FTSE Bursa Malaysia KLCI fell 2.3% amid foreign fund outflows and ongoing global uncertainty linked to geopolitical tensions and expectations over US Federal Reserve policy direction.
