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).

In its Monthly Highlights for June 2026 released today, the central bank said the 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.

BNM said 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 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 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,” it said.

Meanwhile, it said credit to the private non-financial sector remained stable at 6.4 per cent in June reflecting sustained growth in both outstanding loans at 6.0 per cent and corporate bonds at 8.1 per cent from 8.0 per cent in May.

BNM said 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 (SMEs), 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,” it said.

As for banks’ assets quality, BNM said gross and net impaired loans ratios remained broadly unchanged at 1.4 per cent and 1.0 per cent respectively, while loan loss coverage ratio (including regulatory reserves) remained prudent at 124.6 per cent of gross impaired loans in June 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, it said.

On financial markets, BNM said global market sentiment continued to be influenced by rising expectations of a possible rate hike by the United States Federal Reserve (Fed) by end-2026,

This is underpinned by stronger-than-expected labour market data, elevated inflation readings and the 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,” it said.

The benchmark 10-year Malaysian Government Securities yields increased by 4.0 basis points (bps) amid higher net bond issuances, while the FTSE Bursa Malaysia KLCI declined by 1.1 per cent driven by non-resident outflows, it added. — Bernama