Core inflation held steady at 1.9% in March.
PETALING JAYA: Despite what may seem contrary to public perception, headline inflation for March 2025 has risen at a slower rate of 1.4%, compared to 1.5% in February.
The consumer price index (CPI) stood at 134.1, up from 132.2 in March 2024, according to the Statistics Department.
Meanwhile, core inflation – the change in the costs of goods and services excluding food and energy prices – held steady at 1.9% in March, unchanged from February.
The Statistics Department said the slower pace of inflation in March 2025 was driven by more modest increases in several categories: personal care, social protection and miscellaneous goods and services rose by 3.6%; restaurants and accommodation services (2.9%); housing, water, electricity, gas and other fuels (1.9%); and furnishings, household equipment and routine household maintenance (0.2%).
At the same time, chief statistician Datuk Seri Dr Mohd Uzir Mahidin noted that inflation for both the education (up 2.2%) and recreation, sport and culture (up 1.7%) recorded higher increases compared to February 2025.
“Meanwhile, food and beverages (up 2.5%), insurance and financial services (1.5%), health (1%) and transport (0.7%) increased at the same rate as recorded in the previous month.
“In addition, information and communication and clothing and footwear, remained in negative territory, slowing down by 5.4% and 0.2%, respectively,” he said.
Speaking to address the concerns of Malaysians who doubt whether the official numbers reflect on-the-ground realities, economist Geoffrey Williams explained that the Statistics Department measures an index of the most commonly purchased items across thousands of outlets.
“As such, it does produce an accurate measure of prices and inflation,” he told StarBiz. That said, he acknowledged that public perception may differ, especially among low-income groups.
“It is largely the income effect that people notice,” Williams said.
“But periodically, they also feel the impact of accumulated price increases while shopping. This is when small past hikes suddenly become more noticeable.”
He added that the widespread use of e-payments contributes to this dynamic as people are no longer counting cash during transactions.
Therefore, they may not keep close track of price changes. This means the average person may only feel the pinch once price increases have accumulated to a noticeable level, Williams added.
On his outlook on CPI movements for the rest of the year, he said it is good that inflation is lower in the early part of the year, especially as further price increases – such as those expected from RON95 subsidy rationalisation – could emerge later.
“So, lower inflation now will help keep overall inflation for the year low,” he said.
Moreover, Williams said consumers should not be too concerned about inflation or the impact of US tariffs, commenting: “These will have very little effect on the general public, so it’s very much a case of keep calm, carry on business as usual.”
Expanding on the latest data released yesterday, Mohd Uzir observed that the food and beverages group, which contributes 29.8% of the total CPI weight, rose by 2.5% in March, keeping pace with the growth registered in February.
He noted that the food at home subgroup increased by 0.6%, up slightly from 0.5% in the previous month, offering a glimpse into why many Malaysians might still be feeling a pinch at the checkout counter.
“The inflation for fish and other seafood expenditure class recorded an increase to 1.7% in March 2025, against February’s 1.2%. Among the items that recorded an increase on a year-on-year (y-o-y) basis in March 2025 were barramundi 10.6%, cuttlefish at 6.7%, sardine at 1.4% and torpedo scad at 1.4%.”
Looking at y-o-y quarterly figures, Mohd Uzir said the inflation rate for the first quarter of 2025 (1Q25) slowed to 1.5%, down from 1.8% in 1Q24.
This moderation was attributed to a slowdown in price increases for housing, water, electricity, gas and other fuels, as well as health and transport categories.
On a sequential basis, however, inflation increased by 0.4% in 1Q25, compared to 0.2% in the 4Q24.
Of interest, UOB senior economist Julia Goh concurred that the published inflation data and effects of the cost of living felt on the ground often differ.
She told StarBiz this discrepancy arises from statistical methodologies, the specific items surveyed in the CPI and lifestyle variations. Inflation is just one measure of price changes, capturing the price changes of a subset of basic goods and services.
“The items captured are mostly essentials and would not reflect the diverse consumption patterns of households from different income groups.”
Despite the moderate inflation reading in recent months, Goh said her outlook for Malaysia is that headline inflation will gradually edge higher in the second half of the year, largely due to base effects.
“This will take full-year inflation to an average of 2.3% this year,” she said, adding that just as businesses may adopt a wait-and-see approach amid tariff uncertainties, consumers may also hold back on big-ticket purchases or adjust their spending habits.
“Key wild cards to our inflation outlook include domestic price policy changes, global trade and tariff policies, as well as fluctuations in global commodity prices and currencies,” she added.
Meanwhile, a trader familiar with the domestic economic trends cautioned that while overall inflation has slowed, costs in education and leisure services remain elevated.
“The cost of eating out is cooling, but still remains high.
This shows living expenses remain sticky.
“In other words, behind this data, there’s still pressure from uneven consumption structure adjustments,” he added.
Moving forward, he said focus should be on price movements in sectors such as consumer, logistics and technology.
On a separate note, CIMB Treasury and Markets Research is forecasting that Bank Negara may cut the overnight policy rate by 25 basis points to 2.75% in July, primarily to address growth concerns linked to the US-imposed trade tariffs and broader global trade uncertainties.
It said the move would give the central bank room to assess more macroeconomic data, particularly relating to external trade, following the “Liberation Day” tariffs and developments in ongoing trade negotiations with the United States.
