Malaysia's Inflation Eases to 1.8% in September 2026

Price increases in Malaysia slowed slightly in September 2026. According to figures released by the Department of Statistics Malaysia (DOSM) on 19 October, the consumer price index (CPI) rose 1.8% year on year, down from 1.9% in August.

The New Straits Times reported that the easing came as housing-related costs and food prices grew at a more moderate pace.

The key figures

Based on the DOSM release and media reports:

• Headline inflation was 1.8% year on year, compared with 1.9% in August.
• Month on month, prices rose 0.1%, after a 0.3% increase in August.
• Core inflation, which strips out volatile items, was 1.7%.
• Food and non-alcoholic beverages rose 1.8%.
• Housing, water, electricity, gas and other fuels rose 1.4%.

Food prices showed an interesting split. Food at home rose 1.2%, while food away from home, such as meals at restaurants and stalls, rose 2.6%, according to Business Today.

Why inflation stays moderate

Global energy prices have been elevated this year because of the conflict in the Middle East. Yet Malaysia's inflation has stayed relatively low. Part of the reason, as The Star noted in its report on Bank Negara's latest comments, is government subsidies that keep domestic fuel prices in check. Targeted fuel subsidies mean eligible Malaysians continue to pay a fixed price for RON95.

Electricity bill relief also plays a role. Domestic users consuming up to a certain level have been exempted from some charges until the end of the year, according to TNB.

Key takeaway: inflation is low on paper, but eating out is rising faster than cooking at home. That gap is what many households feel.

Low inflation does not mean cheap living

A 1.8% inflation rate means prices are still rising, just more slowly. For many households, the concern is the level of prices rather than the pace. After several years of increases, items like food, rent and transport remain a big share of monthly spending.

This is why cost of living stayed a central theme in Budget 2027, with measures on wages, cash aid and tax relief. Our Budget 2027 preview looked at how the government balanced household relief with fiscal discipline.

What it means for Malaysians

Here is how the latest numbers may affect daily life:

1. Eating out costs more relative to cooking at home. If your budget is tight, preparing more meals at home could help.
2. Fixed-income households, such as retirees, benefit when inflation stays moderate, as their money keeps more of its value.
3. Interest rates remain a watch point. Bank Negara has said it has room to act if price pressures rise, which could affect home and car loan repayments.
4. Businesses may find it harder to raise prices without pushback, as consumers remain careful with spending.

What to watch next

Upcoming months will show whether energy prices, wage changes and any subsidy adjustments push inflation higher. The planned minimum wage increase to RM2,000 from June 2027 is one factor economists will watch for its effect on prices.

For now, September's figures suggest price pressures in Malaysia remain contained, giving households and policymakers a little breathing room.