Inflation in Malaysia Dropped To An All-Time Low in 2023

According to the Department of Statistics Malaysia (DoSM), the inflation rate in Malaysia has fallen to its lowest level of 2023, hitting 2.4% in June. This rate has even gone lower than the Central Bank’s (Bank Negara) prediction, which ranges from 2.8% to 3.8%. This is good news for Malaysians as it grants people a higher purchasing power and, subsequently, allows businesses to operate more efficiently. Generally, the reduction in the inflation rate in Malaysia is a positive sign for the economy overall.

Malaysia’s Chief Statistician, Datuk Seri Dr. Mohd Uzir Mahidin, announced that the country experienced a slower rise in inflation in June for a few reasons. The restaurant and hotel industry declined from 6.7% in May to 5.4% in June. Additionally, the sector for furnishings, household equipment, and routine household maintenance witnessed a slower rate, with inflation dropping to 2.3% in June compared to 2.7% in May.

He mentioned that the category of food and non-alcoholic beverages, which makes up 29.5% of the total Consumer Price Index (CPI), decreased from 5.9% in May to 4.7% in the following month. The subcategory of food at home also experienced a slower growth rate of 3.2% last month, compared to 4.3% in May 2023. Similarly, the subcategory of food away from home decreased to 6.8% from the previous 8.1%. These shifts in inflation rates suggest a temporary relief in consumer prices – for the time being.

Economists explained that the slower increase in the prices of food, transportation, and certain services was mainly due to a combination of factors. These included the influence of service prices (base effects) and government assistance programs like subsidies, contributing to decreased inflation. Nevertheless, local economists are continuing to monitor the trends closely for their potential impact on the overall economy in the future.

Malaysia’s Inflation Rate Lowest in ASEAN, Below Eurozone and US

When comparing globally, Malaysia recorded a much lower inflation rate. Malaysia’s inflation of 2.4% was comparatively lower – below the Eurozone’s inflation rate of 5.5% and the United States’ 3%. When compared within the Asia Pacific region, inflation in Malaysia did better than in countries like South Korea, Indonesia, and the Philippines. Moving on to the Malaysian states, 10 reported inflation rates below the national average of 2.4%, with Labuan Federal Territory having the lowest at 1.2% in June. However, six states, including Sarawak, Pahang, Putrajaya, Selangor, Perak, and Melaka, saw inflation rates above the national average, ranging from 2.7% to 3.0%.