KUALA LUMPUR, July 31 — Lower retail fuel inflation, particularly for RON97 and diesel, contributed to Malaysia’s headline inflation easing to 1.9 per cent in June, said Bank Negara Malaysia (BNM).
Headline and core inflation moderated slightly to 1.9 per cent from 2.0 per cent in May, reflecting easing external cost pressures and lower inflation across several core items.
Lower core inflation also contributed to the decline, mainly reflecting base effects from the increase in streaming services inflation in June 2025, alongside lower inflation for jewellery and watches amid softer global gold prices.
“The Index of Wholesale and Retail Trade moderated to 3.1 per cent in May from 6.2 per cent in April, while growth in the retail (4.4 per cent; April 2026: 3.9 per cent) segment improved, driven mainly by retail trade in non-specialised stores and retail sale of automotive fuel in specialised stores.
“However, this was more than offset by moderating wholesale trade and a decline in the motor vehicle segment. This was mainly contributed by slower growth for other specialised wholesale, wholesale of household goods and lower sales of motor vehicles,” BNM said in its Monthly Highlights for June 2026 released today.
Meanwhile, credit to the private non-financial sector remained stable at 6.4 per cent in June, reflecting sustained growth in both outstanding loans (6.0 per cent) and corporate bonds (8.1 per cent), up from 8.0 per cent in May.
It added that business loan growth continued its upward trend at 7.2 per cent in June from 7.0 per cent in May, driven mainly by loans to non-small and medium enterprises, particularly for working capital purposes.
“Outstanding household loans grew by 5.3 per cent (May 2026: 5.5 per cent) amid some moderation in the growth of personal use loans,” BNM said.
As for banks’ asset quality, gross and net impaired loan ratios remained broadly unchanged at 1.4 per cent and 1.0 per cent, respectively, while the loan loss coverage ratio (including regulatory reserves) remained prudent at 124.6 per cent of gross impaired loans in June, up from 124.1 per cent in May.
The banking system continued to record healthy liquid asset buffers with an aggregate liquidity coverage ratio of 149.7 per cent from 149.2 per cent in May.
On financial markets, it said global market sentiment continued to be influenced by rising expectations of a possible rate hike by the United States Federal Reserve (US Fed) by end-2026.
This is underpinned by stronger-than-expected labour market data, elevated inflation readings and the US Fed’s updated economic projections.
“Amid these global developments, the ringgit depreciated by 2.6 per cent against the US dollar, following the strengthening of the US dollar,” BNM said.
The benchmark 10-year Malaysian Government Securities yields increased by 4.0 basis points amid higher net bond issuances, while the FTSE Bursa Malaysia KLCI declined by 1.1 per cent driven by non-resident outflows.
