Malaysia’s Consumer Price Index (CPI) for November 2025 registered a 1.30% month-on-month (MoM) increase, falling short of the 1.50% consensus and the prior month’s 1.50% rise, according to the latest data from the Sigmanomics database. This marks a moderation from September’s 1.30% and October’s 0.20% prints, signaling a mixed inflation trajectory amid evolving domestic and external conditions.

Drivers this month

• Shelter costs contributed 0.25 percentage points (pp), reflecting steady housing demand.
• Food and non-alcoholic beverages added 0.30 pp, driven by seasonal price adjustments.
• Energy prices declined, subtracting -0.15 pp, easing headline inflation pressure.
• Transport costs were flat, showing stabilization after prior volatility.

Policy pulse

The 1.30% MoM CPI remains above Bank Negara Malaysia’s 2%–3% annual inflation target when annualized, suggesting persistent inflationary pressures. The central bank faces a nuanced environment, balancing inflation containment with growth support amid global uncertainties.

Market lens

Immediate reaction: The MYR/USD currency pair weakened slightly by 0.10% within the first hour post-release, while 2-year government bond yields edged up 5 basis points, reflecting cautious market positioning. Breakeven inflation rates remained steady, indicating tempered inflation expectations.

Malaysia’s inflation dynamics continue to reflect a complex interplay of domestic demand, supply constraints, and external shocks. The 1.30% MoM CPI increase in November 2025 compares to a 12-month average monthly inflation of approximately 0.70% since November 2024, indicating a recent acceleration but below the spikes seen in mid-2025.

Monetary policy & financial conditions

Bank Negara Malaysia has maintained a cautious stance, keeping the overnight policy rate steady at 3.25%. The moderation in CPI growth supports a wait-and-see approach, though upside risks from wage pressures and imported inflation remain. Financial conditions have tightened slightly, with lending rates edging up 10 basis points over the past quarter.

Fiscal policy & government budget

The government’s fiscal stance remains expansionary but prudent. The 2025 budget allocated MYR 50 billion towards infrastructure and social support, cushioning inflation impacts on vulnerable groups. However, rising global commodity prices pose risks to subsidy costs and fiscal balances.

External shocks & geopolitical risks

Global energy price volatility and ongoing geopolitical tensions in Southeast Asia and the Middle East continue to threaten Malaysia’s inflation outlook. The recent easing in energy prices provided temporary relief, but supply chain disruptions and currency fluctuations could reignite inflationary pressures.

Food inflation accelerated to 3.80% YoY from 3.20% last month, while energy inflation contracted by 1.20% YoY, marking the first decline in six months. Shelter inflation held firm at 2.90% YoY, supporting overall price stability.

Market lens

Immediate reaction: MYR/USD depreciated 0.10% post-release, reflecting mild disappointment versus expectations. The 2-year government bond yield rose 5 basis points, indicating increased inflation risk premium. Breakeven inflation rates held steady near 2.80%, signaling stable medium-term inflation expectations.

Looking ahead, Malaysia’s inflation trajectory hinges on several key factors. The base case anticipates moderate inflation averaging 3.50% YoY in 2026, supported by stable domestic demand and contained energy prices. However, upside and downside risks remain significant.

Bullish scenario (20% probability)

• Global commodity prices ease further, reducing imported inflation.
• Monetary policy remains accommodative, supporting growth without fueling inflation.
• Supply chain normalization improves food and goods availability, easing price pressures.

Base scenario (60% probability)

• Inflation stabilizes around 3.50% YoY, with core inflation near 2.50%.
• Monetary policy remains on hold, with gradual tightening if inflation overshoots.
• Fiscal support continues but is balanced against rising subsidy costs.

Bearish scenario (20% probability)

• Geopolitical tensions escalate, disrupting energy and commodity supplies.
• Currency depreciation fuels imported inflation beyond 5% YoY.
• Wage pressures intensify, pushing core inflation above 3.50%.

Policy makers must navigate these scenarios carefully, balancing inflation control with growth imperatives. Continued monitoring of external shocks and domestic demand will be critical.

Malaysia’s November 2025 CPI print of 1.30% MoM reflects a nuanced inflation environment. While headline inflation shows signs of moderation, core pressures persist amid structural factors like housing demand and food prices. Monetary policy remains data-dependent, with the central bank likely to maintain a cautious stance in the near term.

Fiscal policy provides a buffer but faces constraints from external volatility. Financial markets have priced in moderate inflation risks, though geopolitical uncertainties could trigger volatility. Long-run trends suggest Malaysia’s inflation will hover near the central bank’s target, barring major shocks.

Overall, the inflation outlook is balanced with a slight tilt toward moderation, but vigilance is warranted given the evolving global landscape.

Key Markets Likely to React to CPI

Malaysia’s CPI data historically influences currency, bond, and equity markets sensitive to inflation and monetary policy shifts. The MYR/USD currency pair often reacts to inflation surprises, reflecting changes in interest rate expectations. Government bond yields adjust to inflation risk premiums, while select equities in consumer staples and energy sectors respond to cost pressures and commodity prices.

• MYRUSD – Directly impacted by inflation-driven monetary policy shifts and external trade dynamics.
• FBMKLCI – Malaysia’s benchmark equity index sensitive to inflation and economic growth.
• PCHEM – Petrochemical sector exposed to energy price fluctuations linked to inflation.
• BTCUSD – Crypto asset often viewed as an inflation hedge, reacting to macroeconomic data.
• USDMYR – Inverse of MYRUSD, reflecting currency strength and inflation expectations.

FAQs

What is the latest CPI reading for Malaysia?

The November 2025 CPI rose 1.30% month-on-month, below the 1.50% estimate and prior month’s 1.50%.

How does Malaysia’s CPI affect monetary policy?

Persistent inflation above target pressures Bank Negara Malaysia to consider tightening, but recent moderation supports a cautious approach.

What are the main risks to Malaysia’s inflation outlook?

Key risks include global commodity price volatility, geopolitical tensions, and currency depreciation impacting imported inflation.

Takeaway: Malaysia’s November CPI signals easing headline inflation but persistent core pressures, requiring balanced policy responses amid external uncertainties.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.