Kuala lumpur: The 1.6 per cent increase in Malaysia's consumer price index (CPI) for January 2026 is considered manageable, as the components that saw significant rises account for only a small share of the index, said an economist.

According to BERNAMA News Agency, Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid highlighted that core CPI inflation, which excludes the effects of subsidies and price-controlled items, increased at a sustained rate of 2.3 per cent for the second consecutive month. Despite this, he cautioned that the cost-of-living issue should not be downplayed. He noted that elevated price levels could disproportionately impact Malaysians across income levels, potentially reducing the purchasing power of middle- and low-income groups.

Meanwhile, Sunway University economics professor Dr. Yeah Kim Leng noted that both headline CPI at 1.6 per cent and core CPI at 2.3 per cent year-on-year in January 2026 were similar to the previous month's rates, suggesting that monthly inflation remained low at the start of the year between two festive periods. He observed that core inflation, which excludes volatile fuel and food prices, remained above the five-year average of 2.1 per cent, indicating that price momentum is picking up.

Earlier, the Department of Statistics Malaysia reported that the CPI rose 1.6 per cent in January 2026, with the index increasing to 135.7 from 133.6 in the same month last year. This rise was driven by four groups, led by personal care, social protection, and miscellaneous goods and services, which increased by 6.6 per cent year-on-year, compared with 5.7 per cent in December 2025.

Commenting on the stronger ringgit, Mohd Afzanizam said it would likely have a positive impact on the Malaysian economy, though the effect on household purchasing power amid rising inflation depends on how quickly businesses pass the benefits to consumers. He explained that in a more competitive market, businesses might adjust their prices lower, but it will take time before the benefits of ringgit appreciation are fully realized by consumers.

He further mentioned that improvements in purchasing power from a stronger ringgit are already visible among Malaysians who travel abroad and businesses that procure raw materials from overseas. The impact of currency appreciation varies; some may feel it almost immediately, while for others, it will take some time.