Malaysia's headline inflation rate dropped to 1.9% in June 2026, down from 2.0% in May, as retail fuel inflation declined, particularly for RON97 gasoline and diesel fuels [1, 2, 3]. Core inflation also eased to 1.9% in June, reflecting reduced external cost pressures and lower inflation in core items such as jewellery and watches, partly due to softer global gold prices [1, 2, 3]. The moderation in core inflation was also influenced by base effects from a higher inflation rate for streaming services recorded in June 2025 [1, 2, 3].
Trade data showed that the Index of Wholesale and Retail Trade moderated to 3.1% in May 2026 from 6.2% in April, while retail trade growth improved to 4.4% from 3.9%, driven by non-specialised stores and automotive fuel sales [1, 2, 3]. However, wholesale trade saw slower growth, and the motor vehicle segment declined due to reduced sales and slower specialised wholesale activity [1, 2, 3].
Credit growth to the private non-financial sector remained steady at 6.4% in June, supported by outstanding loans rising 6.0% and corporate bonds growing 8.1% [1, 2, 3]. Business loan growth increased to 7.2% in June from 7.0% in May, mainly due to working capital loans to non-small and medium enterprises [1, 2, 3]. Outstanding household loans grew by 5.3% in June, slightly down from 5.5% in May [1, 2, 3].
The banking sector maintained sound asset quality, with gross and net impaired loan ratios unchanged at 1.4% and 1.0%, respectively, in June [1, 2, 3]. The loan loss coverage ratio was prudent at 124.6%, up slightly from 124.1% in May [1, 2, 3]. Liquidity buffers remained healthy, as the aggregate liquidity coverage ratio rose to 149.7% in June from 149.2% in May [1, 2, 3].
The latest data show inflation easing and stable financial conditions as of June 30, 2026, following May’s moderation in trade indices and retail sales [1, 2, 3].
