Kuala lumpur: Malaysia's headline inflation rose to 1.6 per cent in the first quarter of 2026, up from 1.3 per cent in the fourth quarter of 2025, while core inflation eased to 2.1 per cent from 2.3 per cent, as reported by Bank Negara Malaysia (BNM).

According to BERNAMA News Agency, the central bank attributed the increase in headline inflation to initial cost pass-through from higher global cost pressures, influenced in part by the ongoing conflict in West Asia. During this period, electricity charges and fuel prices, particularly RON97 and diesel, saw an uptick, contributing to a slower decline in electricity inflation, which fell by 6 per cent compared to a drop of 10.3 per cent in the previous quarter, and a reduction in fuel inflation to 1.5 per cent from 1.9 per cent.

BNM highlighted that the rise in headline inflation was somewhat mitigated by a decrease in core inflation. This was mainly due to reduced inflation in categories such as food consumed away from home, which decreased to 2.4 per cent from 2.8 per cent, and rental inflation, which lowered to 1.6 per cent from 1.9 per cent. Additionally, the measure of inflation pervasiveness, which tracks the share of Consumer Price Index items registering monthly price increases, declined to 38.3 per cent, down from 39.6 per cent, falling well below the historical first-quarter average of 52.2 per cent.

For the rest of 2026, BNM projects headline inflation to average between 1.5 per cent and 2.5 per cent. The central bank anticipates that the conflict in West Asia will drive inflation higher due to increased global energy and commodity prices, aligning with their expectations. In the absence of significant demand pressures, current policy measures, such as targeted fuel subsidies, are expected to mitigate the immediate impact on broader inflation.

BNM further noted that the effect and speed of the pass-through to domestic prices from the ongoing conflict will depend on the pricing strategies of firms and the prevailing demand conditions.