HEADLINE inflation moderated slightly to +1.1% year-on-year (YoY) in Jun, coming in marginally below median consensus estimate of +1.2%.
On a month-on-month (MoM) basis, inflation was unchanged at +0.1%, as a steeper decline in information & communication costs, coupled with a moderation in housing, utilities & other fuels, helped offset upward pressures from food & beverages (+0.2%), transport (+0.2%) and personal care (+0.4%).
“On a YoY basis, the disinflation was attributed to a sharper contraction in information & communication costs (-5.4% YoY), alongside softer inflation across transport (+0.3% YoY), restaurant & hotels (+2.8% YoY) and recreation services & culture (+0.8% YoY),” said Hong Leong Investment Bank.
Meanwhile, food & beverages (+2.1% YoY), housing, utilities & other fuels (+1.7% YoY) and insurance & financial services (+1.5% YoY) continued to grow at a steady pace.
The transport index eased to +0.3% YoY following slower price growth in public transport services (+0.3% YoY) and the operation of personal transport equipment (+0.3% YoY).
However, on a MoM basis, the transport index rebounded by +0.2% amid stronger MoM inflation in the operation of personal transport equipment and public transport services.
Food inflation remained unchanged at +2.1% YoY. ‘Food at home’ saw a price contraction of -0.4% YoY on the back of larger declines in vegetables (-7.2% YoY) and meat prices (-1.1% YoY), while prices of cereal products fell at a steady pace (-0.3% YoY) and prices of milk, dairy & eggs saw a smaller drop (-1.8% YoY).
Conversely, ‘food away from home’ registered a further pickup in inflation (+4.7% YoY). Globally, food prices rose at a faster pace of +5.8% YoY, led by a larger price gain in meat.
Despite broad disinflationary trends, services inflation inched higher to +2.0% YoY, supported by higher inflation in personal care (+4.2% YoY).
Meanwhile, insurance & financial services inflation was stable (+1.5% YoY). Core inflation (DOSM) held steady at +1.8% YoY.
Higher inflation in food & beverages (+3.8% YoY), transport (+2.3% YoY) and personal care (+4.2% YoY) was offset by a deeper contraction in information & communication services (-5.4% YoY), along with the easing in inflation of furnishings & household equipment (+0.1% YoY) and restaurants & hotels (+2.8% YoY).
Headline and core CPI remained broadly stable in Jun, while producer prices saw a deeper contraction (-3.6% YoY) due to lower commodity prices and stronger ringgit.
Price pressures from global commodities, particularly crude oil, are expected to remain subdued, amid persistent signs of oversupply in the market.
With limited direct impact on CPI from fiscal reforms such as the SST and electricity tariff adjustments for households, we maintain our 2025 CPI forecast at +2.0% with assumption of RON95
adjustment sometime in 2H25. —July 23, 2025
Main image: Global Business Outlook
