KUALA LUMPUR, June 30 — Higher electricity prices, resulting from a surcharge due to increased generation costs, contributed to Malaysia’s headline inflation edging up to 2.0 per cent in May, said Bank Negara Malaysia (BNM).
In its Monthly Highlights for May 2026 released today, the central bank said headline inflation rose to 2.0 per cent in May from 1.9 per cent in April, while core inflation remained stable at 2.0 per cent.
The slight increase in headline inflation largely reflected price developments of non-core items, particularly vegetables and electricity.
“The increase in electricity prices reflected the imposition of a surcharge following higher generation costs,” it said, adding that the pressures were partly offset by lower inflation for domestic air travel and retail fuel, particularly RON97 and diesel.
Meanwhile, credit to the private non-financial sector grew by 6.4 per cent in May, up from 5.8 per cent in April, driven mainly by businesses, as reflected in higher growth in outstanding corporate bonds and business loans.
BNM added that outstanding corporate bonds grew by 8.0 per cent from 6.2 per cent in April, while outstanding business loans increased by 7.0 per cent from 6.2 per cent previously.
Business loan growth increased primarily for working capital purposes, while growth for investment-related loans remained broadly steady.
“Household loan growth was sustained at 5.5 per cent, amid steady loan growth across most purposes,” it said.
As for the real sector, the Manufacturing Industrial Production Index registered higher growth of 8.3 per cent in April, compared with 5.5 per cent in March.
Export-oriented clusters expanded by 8.5 per cent, up from 6.7 per cent previously, driven by higher production of electrical and electronics products and primary-related products such as refined petroleum and chemical products.
The growth in domestic-oriented clusters also strengthened to 8.0 per cent from 2.8 per cent in March, reflecting higher production of motor vehicles, food processing products, and construction-related materials.
BNM noted that banks’ asset quality remained intact, with gross and net impaired loan ratios broadly unchanged at 1.4 per cent and 1.0 per cent, respectively, underpinned by stable impairments and sustained loan growth.
The banking system also maintained adequate liquidity buffers to withstand potential liquidity shocks, with an aggregate Liquidity Coverage Ratio of 149.2 per cent.
On financial markets, it said that global market sentiment continued to be influenced by uncertainties surrounding the West Asia conflict and expectations over the US Federal Reserve’s policy rate path, although sentiment improved somewhat amid optimism over a potential resolution to the conflict during the month.
“Amid these global developments, the ringgit appreciated slightly by 0.1 per cent against the US dollar, broadly outperforming other regional currencies,” BNM said.
The benchmark 10-year Malaysian Government Securities yield remained broadly stable, while the FTSE Bursa Malaysia KLCI declined 2.3 per cent amid non-resident outflows.
