MALAYSIA’S headline inflation eased more than expected in June to 1.1% year-on-year (yoy), down from 1.2% in May, according to This was below both consensus and OCBC’s forecast of 1.2%.

Core inflation, however, remained steady at 1.8% from a year ago.

The main drivers of the June inflation print was the transportation subcomponent (0.3% yoy from 0.7% in May), along with communication (-5.4% yoy from -5.2%) and furnishing (0.1% from 0.2%).

Food (2.1%), utilities (1.7%) and services inflation on education (2.2%) and insurance (1.5%) remained unchanged from May.

As a result of the subdued price pressures, OCBC Global Markets Research in a note today has revised down its full-year 2025 headline Consumer Price Index (CPI) forecast to 1.5% from 2.0%.

“We are reducing our 2025 CPI forecast to 1.5% YoY from 2.0% previously. Subdued headline inflation of 1.4% yoy in 1H25 and reduced prospects of RON95 rationalisation, following the government’s need for a more detailed review of the mechanism have led us to reduce our full year forecast,” it said.

OCBC had previously expected RON95 fuel prices to rise by 20% to 25% starting October 2025, but now sees the likelihood of that being delayed.

On monetary policy, the research house believes Bank Negara Malaysia (BNM) has room to ease further this year as inflation remains contained and growth is expected to moderate.

“Given our view that GDP growth will slow in 2H25 to 3.5% yoy from 4.4% in 1H24 and that inflation will remain low, we see monetary policy as having room to ease further in 2H25. We have pencilled in another 25bp rate cut from BNM for the remainder of the year,” said OCBC. — TMR