[MALAYSIA] Malaysia’s headline inflation rose at a slightly slower pace of 1.4% in March 2025, easing from 1.5% in February, in line with regional patterns of subdued price growth. According to the Department of Statistics, the Consumer Price Index (CPI) reached 134.1 in March, up from 132.2 a year earlier. Core inflation—which excludes the more volatile categories of food and energy—remained unchanged at 1.9% for the second consecutive month.
The deceleration in overall inflation mirrors trends across Southeast Asia, where several economies are reporting tempered price pressures. Singapore posted a 1.3% inflation rate for March, while Thailand recorded a 0.8% rise, largely reflecting the impact of lower global commodity prices and more stable supply chains.
The Statistics Department attributed the easing in headline inflation to milder price increases across several categories: personal care, social protection, and miscellaneous goods and services (3.6%); restaurants and accommodation services (2.9%); housing, water, electricity, gas and other fuels (1.9%); and furnishings and household maintenance (0.2%).
However, Chief Statistician Datuk Seri Dr. Mohd Uzir Mahidin highlighted that education-related inflation rose by 2.2%, while recreation, sport and culture costs climbed 1.7%—both marking increases from February.
Analysts suggest these hikes could be driven by annual tuition adjustments at private institutions and increased domestic travel during school holidays, spurred by a stronger ringgit.
Elsewhere, inflation in categories such as food and beverages (2.5%), insurance and financial services (1.5%), health (1%) and transport (0.7%) remained steady compared to February. Meanwhile, prices for information and communication (-5.4%) and clothing and footwear (-0.2%) continued to decline.
Responding to public skepticism over the official inflation figures, economist Geoffrey Williams explained that the Statistics Department's CPI captures prices of frequently purchased goods across thousands of retail locations, offering a representative measure of inflation. However, he acknowledged that perception gaps persist—particularly among lower-income groups.
“Often, people feel the cumulative impact of previous price hikes more acutely, especially when they shop,” Williams told StarBiz. He noted that the increased use of digital payments may also contribute to reduced awareness of incremental price changes.
A recent survey by a local consumer watchdog found that nearly 65% of respondents believed inflation was higher than official figures suggest, citing frequent price increases at hawker stalls and wet markets. This disconnect underscores the communication challenges policymakers face, especially when essential items fluctuate more sharply than the broader CPI basket.
Looking ahead, Williams said the current moderation in inflation is encouraging, particularly ahead of potential price hikes later in the year, such as those expected from the RON95 fuel subsidy reform.
“A lower inflation rate now provides some buffer for the rest of the year,” he said, downplaying concerns about the broader economic impact of US tariffs. “These won’t significantly affect the average consumer. It’s business as usual.”
Expanding on the March figures, Mohd Uzir said the food and beverages group—accounting for nearly 30% of the CPI’s weight—rose by 2.5%, matching February’s pace. The “food at home” subgroup saw a slight uptick to 0.6%, compared to 0.5% the previous month.
Seafood inflation remained a key contributor, with the fish and other seafood category up 1.7% year-on-year in March, from 1.2% in February. Notably, prices for barramundi surged 10.6%, cuttlefish climbed 6.7%, and sardine and torpedo scad both rose by 1.4%.
On a quarterly basis, headline inflation in the first quarter of 2025 eased to 1.5%, down from 1.8% in the same period last year. This slowdown was driven by softer price increases in housing, utilities, health and transport. Quarter-on-quarter, inflation rose by 0.4% in 1Q25, up from 0.2% in the final quarter of 2024.
UOB senior economist Julia Goh echoed Williams’ view that discrepancies between official data and lived experiences are common. She attributed this gap to the methodology of the CPI and its focus on essential items, which may not fully capture the diverse spending patterns of different income groups.
“Urban households may feel the pinch from rising service costs, while rural communities are more sensitive to changes in agricultural prices,” she said.
Despite recent moderation, Goh anticipates that headline inflation will trend higher in the second half of 2025 due to base effects, projecting an annual average inflation rate of 2.3%.
“As uncertainty around tariffs persists, both businesses and consumers are likely to adopt a cautious approach—delaying large purchases and adjusting spending habits,” she added.
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