Headline inflation dipped to a six-month low of 1.8% YoY in September (Aug: 1.9%), marginally below both forecast
and the market consensus of 1.9%. While food prices continued to rise, maintaining a steady growth rate of 0.1% MoM (Aug: 0.1%), declines in other categories like transport, communication, household equipment, and healthcare pulled inflation lower.

Notably, core inflation also eased, matching the headline rate of 1.8% (Aug: 1.9%), with a stagnant growth rate of 0.0% MoM,
reflecting subdued price pressures across most subsectors. The core transport prices rose slightly to 2.3% (Aug: 2.2%).

Declining transport and communication costs offset food price gains
− Transport (1.1%; Aug: 1.3%): moderated to a four-month low, driven by lower fuel & lubricant prices (0.4%; Aug: 1.2%)
and a decline in petrol price (-0.5%; Aug: 0.0%) amid a drop in global Brent crude oil price (average Sep: USD72.9/barrel
(bbl); Aug: 78.9/bbl).

Communication (0.4%; Aug: 0.5%): eased to a three-month low, driven by a continued decrease in mobile phone equipment prices (-2.2%; Aug: -1.9%), likely reflecting price cuts following the iPhone 16 release in September. Food & non-alcoholic beverages (1.6%; Aug: 1.6%): stayed flat for the third consecutive month, as higher meat and fish prices were offset by lower egg and fruit prices.

2025 headline CPI forecast revised down to 2.7% from 3.5%; inflation likely to slow to 1.9% in 2024 (2023: 2.5%)− Despite upward pressures from global and domestic factors—such as geopolitical tensions, climate change, subsidy reforms, and the withdrawal of EPF's flexible account—Malaysia's inflation is expected to average below 2.0% in 2024.

In view of the latest DOSM report, Kenanga Investment Bank is revising its 2025 outlook lower to 2.7% from 3.5%, which it said reflects the government's decision to limit RON95 subsidy rationalisation to the top 15%, which should moderate inflationary pressures. This adjustment is further supported by expectations of a weaker Brent and a stronger ringgit.

However, the house added that the domestic wage hikes and escalating Middle East tensions could reignite upward pressure on prices. While inflation remains relatively stable and growth prospects solid, Bank Negara Malaysia is likely to maintain a wait-and-see approach, keeping rates unchanged as it monitors evolving global conditions.