Malaysia's Inflation Eases to 1.8% in July as Transport Costs Cool Sharply, Offsetting a Pickup in Food and Housing

Malaysia's consumer prices rose 1.8% in July 2026 compared with a year earlier, the Department of Statistics Malaysia (DOSM) reported, a slight easing from June's 1.9% pace. The Consumer Price Index (CPI) climbed to 137.1 points in July, up from 134.7 points in July 2025.

The main reason the headline rate cooled was transport, where annual inflation dropped sharply to 1.4% in July from 2.8% in June. That deceleration outweighed a pickup elsewhere: food and beverages inflation rose to 1.8% from 1.4%, and housing, water, electricity, gas and other fuels also climbed to 1.8% from 1.4%. Information and communication prices jumped to 3.4% from 2.4%, the fastest-accelerating category in the report.

Several other categories cooled alongside transport, including personal care and social protection (down to 2.9% from 3.4%), restaurant and accommodation services (2.0% from 2.6%), and insurance and financial services, which posted the sharpest slowdown of any category, easing to 1.1% from 5.7%. Regionally, Negeri Sembilan recorded Malaysia's highest state inflation rate at 2.5%, with seven states running above the 1.8% national average.

Headline Inflation Eases for a Second Straight Month

Malaysia's Consumer Price Index (CPI) rose 1.8% year-on-year in July 2026, the Department of Statistics Malaysia (DOSM) reported, down from 1.9% in June. In index terms, the CPI reached 137.1 points in July, up from 134.7 points a year earlier. On a month-on-month basis, headline inflation was unchanged in July, matching the flat reading recorded in June.

Transport Did Most of the Work

The clearest driver of July's softer annual rate was transport, whose prices — which include fuel and vehicle-related costs — rose just 1.4% year-on-year, down from 2.8% in June, a deceleration of 1.4 percentage points. DOSM's statement noted transport had previously been a significant driver of inflation, making its sharp cooling in July the single largest contributor to the overall easing. On a monthly basis, transport prices actually fell 1.1% in July.

But Several Categories Accelerated

The slowdown was not universal. Food and beverages — Malaysia's largest CPI component at 29.8% of the index — saw its annual inflation rate rise to 1.8% in July from 1.4% in June, driven by both food eaten away from home (up to 2.5% from 2.4%) and food prepared at home (up to 1.2% from 0.5%). Housing, water, electricity, gas and other fuels likewise accelerated to 1.8% from 1.4%. The sharpest acceleration of any category was information and communication, which jumped to 3.4% annual inflation from 2.4% in June. Recreation, sport and culture also ticked up, to 1.2% from 1.1%, and clothing and footwear rose 0.1% after showing no growth in June.

Where the Broader Slowdown Showed Up

Outside of transport, several categories decelerated in July. Personal care, social protection and miscellaneous goods and services eased to 2.9% from 3.4%. Restaurant and accommodation services slowed to 2.0% from 2.6%, and education eased slightly to 2.0% from 2.1%. The sharpest deceleration among all categories was insurance and financial services, which dropped to 1.1% annual inflation in July from a much higher 5.7% in June. Health inflation also eased marginally, to 1.1% from 1.2%, while household furnishings, equipment and routine maintenance grew just 0.3%, down from 0.4%.

A Broad Look at Price Movement and Regional Spread

DOSM reported that 374 of 573 items in the CPI basket — about 65.3% — recorded price increases in July, with the large majority of those (98.1%) rising by 10% or less. A further 157 items, or 27.4% of the basket, recorded price declines, while 42 items were unchanged. Regionally, price growth was uneven: seven states recorded inflation above the 1.8% national rate, led by Negeri Sembilan at 2.5%, followed by Kedah and Pahang at 2.3% each, Kuala Lumpur at 2.2%, Johor at 2.1%, Labuan at 2.0% and Sabah at 1.9%. Food and beverage prices rose in every state except Kelantan and Labuan, where they held flat.

Reader Q&A

Did every category of prices slow down in July?

No. While the headline rate eased mainly because transport inflation fell sharply (from 2.8% to 1.4%), several categories accelerated, including food and beverages and housing and utilities (both up to 1.8% from 1.4%), and information and communication, which jumped to 3.4% from 2.4%.

What is Malaysia's largest CPI component, and how did it move in July?

Food and beverages carries the largest weight in Malaysia's CPI basket, at 29.8%. Its annual inflation rate accelerated to 1.8% in July from 1.4% in June, driven by increases in both food eaten away from home and food prepared at home.

Which category saw the sharpest slowdown in July?

Insurance and financial services recorded the sharpest deceleration of any category, easing to 1.1% annual inflation in July from 5.7% in June.

Which Malaysian state had the highest inflation rate in July?

Negeri Sembilan recorded the highest state-level annual inflation rate, at 2.5%, followed by Kedah and Pahang, both at 2.3%.

Did prices fall for any items in July?

Yes. DOSM reported that 157 of the 573 items in the CPI basket, or 27.4%, recorded price declines in July, while 42 items were unchanged and the remaining 374 items rose in price.