PETALING JAYA: Malaysia’s inflation climbed to 1.9% in April 2026, its highest reading in 18 months, driven largely by increases in transport prices amid fuel cost pressures tied to the Middle East conflict.
The country’s consumer price index (CPI) increased to 136.9 from 134.3 in the previous year, according to the Statistics Department. Inflation in March 2026 stood at 1.7%.
Core inflation – which excludes items with volatile prices or government-administered prices – for April 2026 came in at 2%, easing from 2.1% in the month prior.
Economists believe inflation will likely continue to creep up in the coming months as businesses begin to pass through higher costs to consumers.
“The headline inflation in April was marginally below our forecast of 2%,” Julia Goh, senior economist at United Overseas Bank, told StarBiz.
“While the reading was slightly softer than anticipated, we maintain our view that inflation is likely to edge higher from May onwards.”
Select industries such as aviation, logistics, postal services, and rubber and plastic products, are seeing more visible cost pressures, which are starting to reflect in prices, Goh added.
However, she further noted that the broader inflation impact may not be materially evident at this stage, given the relatively smaller weights of these sectors in the CPI basket.
Currently, pass-through of higher costs is staggered by drawdown of inventories previously bought at lower prices, but following depletion of these stocks, upward consumer price pressure may become more apparent in the months ahead, she also said.
“For now, existing fuel subsidies continue to serve as an important buffer, limiting broader inflationary spillovers across the economy.”
Socio-Economic Research Centre executive director Lee Heng Guie similarly said headline and core inflation is likely to continue inching up in coming months due to fuel cost pressures.
“We expect inflation for the full year to average in the range of 2.5% to 2.8%,” he said.
The prediction sits above the Finance Ministry’s 2026 inflation projection of between 1.3% and 2% in its Economic Outlook Report 2026 released in October 2025.
“Domestic inflation pressures will remain on the back of direct and indirect impact from energy prices and other related costs,” Lee said.
“We have heard from many companies that while they currently hold old stock, they are ready to raise prices starting from the second half of this year.”
Consumer sentiment, he added, is expected to be cautious as a result of higher inflation and cost of living.
Spending may be further weighed down by uncertainty around Malaysia’s fuel supply lasting past the next few months due to global supply chain volatility, and the recent reductions in BUDI95 fuel subsidy quota.
“Consumers will be quite wary about the next steps the government may take,” he said.
According to the Statistics Department, transport inflation surged from 1.6% in March to 4.1% in April.
Fuel prices saw a sharp rise, with the average market price of RON95 unleaded petrol growing to RM4 per litre from RM3.16 per litre in March.
This is compared to the subsidised price of RM1.99 per litre.
Diesel’s average price in Peninsular Malaysia reached a higher rate of RM5.92 per litre in April.
This was up from RM4.12 per litre in the previous month.
Centre for Market Education chief economist Alvin Desfiandi said the Statistics Department data is already signalling that the shock is no longer confined to petrol stations, further pointing out that 63.5% of CPI items recorded price increases in April, up from 62.5% in March.
While price pressures were primarily reflected in transport, inflation in April also had contributions from alcoholic beverages and tobacco (2.7% to 2.8% from March to April), information and communication (1.4% to 2%), food and beverages (1.1% to 1.2%), and furnishings, household equipment and routine household maintenance (0.1% to 0.4%).
“The transmission pathway over the next two to three months runs through logistics, food services, and personal services,” Desfiandi opined.
He said the components which are most likely to see immediate price increases are “food away from home” or “restaurants and accommodation services”, as a result of higher fuel, cooking gas and logistics costs.
Meanwhile, Desfiandi highlighted that consumer sentiment is unevenly structured.
This is as the poorest households are partly shielded by targeted cash transfers while the wealthiest can absorb cost hikes, leaving the middle-income consumer class most exposed to the erosion of real purchasing power.
“Some have already been maintaining spending by drawing down savings or borrowing – a pattern that Bank Negara Malaysia flagged as unsustainable if cost pressures persist beyond two to three quarters.”
