May 23, 2025
PETALING JAYA – Headline inflation for April 2025 has risen at a rate of 1.4%, matching the pace of March but fractionally lower than the 1.5% seen in February.
The consumer price index (CPI) stood at 134.3 as against 132.4 in the same month a year ago, according to the Statistics Department.
Meanwhile, core inflation increased to 2% in April as compared to the 1.9% seen in March, driven by personal care, social protection and miscellaneous goods and services; food and beverage (F&B); as well as restaurant and accommodation services.
The Statistics Department said as headline inflation growth remained flat for the second consecutive month, item classes that drove the increase in the CPI included personal care, social protection and miscellaneous goods and services, education as well as housing, water, electricity, gas and other fuels.
At the same time, classes that saw lower increases compared to March were F&B, recreation, sports and culture, health as well as furnishings, household equipment and routine household maintenance.
According to chief statistician Datuk Seri Mohd Uzir Mahidin, inflation for restaurant and accommodation services, insurance and financial services, alcoholic beverages and tobacco as well as transport increased at the same rate as recorded in March.
“Additionally, information and communication and clothing and footwear remained in negative territory, declining by 4.5% and 0.1%, respectively,” he said.
In ensuring the April CPI numbers make sense to the ordinary Malaysian, especially to those who are feeling the pinch at the increase in the cost of living, OCBC senior Asean economist Lavanya Venkateswaran said the interpretation of inflation rates of the Statistics Department is two-fold, primarily measuring the rate of change in prices compared to the same month a year ago.
“For example, the CPI data print is saying that April food prices rose by 2.3% compared to last year’s prices, but this rate of increase was slower than 2.5% in March 2025,” she said.
In addition, she implied that household earnings are an equally important part of the cost of living equation, explaining that Bank Negara had made a distinction between rising costs and inflation pressures in its 2024 annual report.
She noted “the central bank showed that until the fourth quarter of last year (4Q24), food prices were rising faster than nominal private sector wages per worker. We expect this has continued into 2025”.
On the CPI outlook for the rest of the year, Lavanya is keeping her expectations for RON95 rationalisation to come into effect next month, with prices of the “yellow fuel” being revised higher by 25% in a one-time adjustment.
“We forecast average 2025 headline inflation of 2.7% year-on-year (y-o-y), implying average higher inflation of 3.5% from June until year-end, versus an average of 1.5% from January to May,” she told StarBiz.
On the other hand, the economist acknowledged the risk is that the government could remain flexible in its approach by adjusting the magnitude and timeline of the implementation of the anticipated targeted fuel subsidies.
Should this materialise, Lavanya said the risk to her average 2025 headline CPI forecast would be to the downside, which should generally be good news to Malaysians at least for the immediate term.
With the lower increase for April in prices of the F&B group, which notably contributes to 29.8% of the total CPI weight, Mohd Uzir reported that the subgroup of food at home increased 0.5% in April as compared to 0.6% in the preceding month.
Delving deeper, he said: “The decrease of expenditure class for vegetables, milk, other dairy products and eggs, fruits and nuts, cereals and cereal products as well as meat contributed to the slower increase of the F&B group in April 2025.”
Bernard Aw, chief economist for Asia-Pacific at trade credit insurer Coface, observed that inflation expectations are typically higher than actual inflation rates, remarking that this is a global phenomenon which is not unique to Malaysia.
He explained “our perception of inflation is driven by what we usually buy on a daily basis compared to what we buy less often.
“Another reason is that the CPI only captures the prices of goods and services that we consume, but not actually reflecting the cost of living, which can include prices of other living expenses such as home ownership.”
Dissecting the data further, he said although food inflation as a whole is slower and at a milder y-o-y compared to March, the components of the food index show higher inflation in prices for food away from home, ready-made food and non-alcoholic beverages.
“These components could conform closer to the public’s view of inflation. At the same time, core inflation is also an important measure, and compared to headline CPI, it is accelerating. April’s core CPI is the highest in nearly 1.5 years,” Aw said.
Meanwhile, economist Doris Liew, who specialises in South-East Asia developments, opined that although CPI numbers for April have seen a marginal increase, the real strain on Malaysian households comes from persistently weak wage growth.
This echoes the discovery made by Bank Negara, which was referenced by Lavanya.
Liew said the cost of F&B, in particular, has consistently outpaced overall inflation, placing disproportionate pressure on everyday spending. “Malaysia’s wage index has consistently underperformed the CPI since 2022,” she lamented.
Looking ahead, she feels that inflation levels will remain uncertain for the rest of the year, as the planned rationalisation of RON95 fuel subsidies, along with persistent disruptions in global supply chains could add pressure.
“However, beyond these risks, there are currently no major drivers of higher inflation on the horizon,” Liew said.
That said, she believes that volatility in global trade poses another concern, pointing out that tariff measures and rising protectionism could erode the competitiveness of Malaysia’s export-oriented sectors.
This, in turn, could weaken economic growth and further suppress wage increases, ultimately eroding purchasing power, she added. “In this climate, prudence is key. Households would do well to build up substantial savings buffers, not only as a good financial habit but also as a safeguard against the possibility of a global economic downturn,” Liew suggested.
A trader familiar with domestic economic trends is of the view that Malaysia’s inflation for the rest of 2025 is likely to remain moderate, within the 1.5% to 2% range, with potential spikes to 2.5% in 4Q25 due to festive demand and possible commodity price increases.
On the whole, he said the current 1.4% headline inflation rate is relatively low compared to regional peers, and the slight month-on-month increase of 0.1% suggests stability, before noting that core inflation at 2% could indicate underlying price pressures in non-volatile sectors like personal care and dining out.
“F&B and housing will be key drivers, while transport inflation may rise to 1% to 1.5% if diesel costs persist. For the lower-income category, rising cost of living will continue to challenge purchasing power, while external risks like global commodity prices or currency fluctuations could push inflation higher, but government measures should provide some stability,” he said.