Malaysia’s headline inflation eased to 1.8% year-on-year (y-o-y) in July 2026, down from 1.9% in June, as lower fuel prices and the implementation of targeted diesel subsidies helped moderate transport costs, according to the Department of Statistics Malaysia (DOSM).
DOSM said the Consumer Price Index (CPI) rose to 137.1 points in July, compared with 134.7 points in the same month last year.
The moderation was mainly driven by the Transport group, which slowed to 1.4% in July from 2.8% in June.
The Personal Care, Social Protection & Miscellaneous Goods & Services group also moderated to 2.9% from 3.4%, while slower increases were recorded in Alcoholic Beverages & Tobacco at 2.7% (June: 2.8%), Restaurant & Accommodation Services at 2.0% (2.6%) and Education at 2.0% (2.1%).
Insurance & Financial Services recorded a sharper moderation to 1.1% from 5.7%, while Health eased marginally to 1.1% from 1.2%.
In contrast, Information & Communication inflation accelerated to 3.4% from 2.4%.
Food & Beverages, which carries the largest weight in the CPI basket at 29.8%, also recorded faster inflation, rising 1.8% in July compared with 1.4% in June.
DOSM said higher food inflation was driven by increases in both food consumed at home and food consumed outside the home.
Food away from home inflation edged up to 2.5% from 2.4%, while food at home accelerated to 1.2% from 0.5%.
The Meat expenditure class recorded a sharper increase of 3.2%, compared with 1.5% previously. Chicken, which accounts for 32.6% of the Meat expenditure class, saw inflation accelerate to 6.7% from 1.2%.
The average price of standard chicken in Malaysia rose to RM10.88 per kilogramme in July from RM10.25 a year earlier, and from RM10.77 in June.
In Peninsular Malaysia, the average price increased to RM10.17 per kg from RM9.43 a year earlier and RM10.03 in June.
Vegetable prices also moved higher, with the expenditure class recording 1.0% inflation compared with a 1.8% decline in June.
Among notable increases, tomatoes rose 19.6%, Chinese kale 10.4%, lettuce 9.5%, angle gourd 8.8% and long cabbage 8.3%.
For food consumed outside the home, prices of local cakes, noodle-based food, satay, roti canai and chicken rice recorded higher annual increases in July.
The Housing, Water, Electricity, Gas & Other Fuels group recorded inflation of 1.8% in July, up from 1.4% in June.
Water supply and miscellaneous services relating to dwellings rose 7.3%, while electricity, gas and other fuels increased 2.0%, compared with a 2.3% decline previously.
The increase came amid a higher Automatic Fuel Adjustment (AFA) surcharge for higher electricity consumption.
For domestic users in Peninsular Malaysia consuming more than 600 kilowatt-hours (kWh), the AFA surcharge was set at 3.59 sen per kWh for July, compared with 2.59 sen per kWh in June.
Households consuming 600 kWh and below were not affected.
Meanwhile, all domestic users in Sarawak continued to receive a 25% electricity bill discount from April to December 2026, benefiting about 714,000 households.
Transport inflation moderated sharply to 1.4% in July from 2.8% in June, primarily due to slower increases in the operation of personal transport equipment, which eased to 1.3% from 3.1%.
Public transport services inflation remained unchanged at 6.5%.
The average market price of RON97 petrol declined to RM4.07 per litre in July from RM4.33 in June, while diesel prices fell to RM4.14 from RM4.50.
RON95 averaged RM3.47 per litre, down from RM3.69 in June, compared with the subsidised price of RM1.99 per litre.
DOSM said the implementation of the BUDI Diesel mechanism from July 1 also contributed to the moderation in transport inflation.
Under the targeted subsidy mechanism, eligible owners of private diesel vehicles can purchase diesel at RM2.10 per litre through MyKad verification.
The mechanism is expected to benefit about 400,000 private diesel vehicle owners in Peninsular Malaysia and another 300,000 in Sabah, Sarawak and Labuan.
DOSM said 374 out of 573 items, or 65.3%, recorded price increases in July.
However, 367 of those items, equivalent to 98.1%, registered increases of 10% or less, while only seven items recorded increases exceeding 10%.
Another 157 items, or 27.4%, recorded price declines, while 42 items remained unchanged.
On a month-on-month basis, Malaysia’s headline inflation was unchanged at 0% in July, following the same reading in June.
Food & Beverages increased 0.3% month-on-month, while Recreation, Sport & Culture and Restaurant & Accommodation Services rose 0.2% each.
Transport recorded the largest monthly decline at 1.1%, while Personal Care, Social Protection & Miscellaneous Goods & Services fell 0.5%.
Seven states and federal territories recorded inflation above the national rate of 1.8%.
Negeri Sembilan recorded the highest inflation at 2.5%, followed by Kedah and Pahang at 2.3% each.
Kuala Lumpur recorded inflation of 2.2%, while Johor registered 2.1%, Labuan 2.0% and Sabah 1.9%.
DOSM said all states recorded increases in Food & Beverages inflation except Kelantan and Labuan, where food prices were unchanged.
The July inflation reading comes as Malaysia continues to navigate changing global energy prices and the impact of targeted subsidy reforms, with lower transport costs helping to contain broader price pressures despite firmer food and housing-related costs.
