
April CPI Reading Points To OPR Hold For 2025: Kenanga
Malaysia's headline inflation rate remained unchanged at 1.4% year-on-year in April, marking the lowest level in 50 months, according to Kenanga Investment Bank's Consumer Price Index (CPI) analysis of today's report released by DOSM. The figure was in line with both market consensus and house expectations.
Although annual inflation held steady, price pressures inched up month-on-month (MoM) by 0.15%, reversing a flat reading in March. The uptick was driven by increased costs in housing, miscellaneous goods and communication services. These gains were partially offset by a slight monthly decline in food prices, which slipped by 0.06% after rising 0.06% in the previous month.
Core inflation, which strips out volatile items such as food and fuel, rose modestly to 2.0% year-on-year (MoM: 0.23%), up from 1.9% in March. This suggests resilient underlying demand in the domestic economy despite the subdued headline figure.
Price Pressures Shift Beneath the Surface Housing costs rose slightly to 2.0% (March: 1.9%), underpinned by a notable rise in repair and security costs for dwellings, which surged 6.7%.
rose slightly to 2.0% (March: 1.9%), underpinned by a notable rise in repair and security costs for dwellings, which surged 6.7%. Miscellaneous goods and services posted a 4.1% increase (March: 3.6%), led by higher prices for jewellery and watches (up 19.6%).
posted a 4.1% increase (March: 3.6%), led by higher prices for jewellery and watches (up 19.6%). Communication deflation eased to -4.5% (March: -5.4%) as mobile service charges rose 2.4% MoM.
eased to -4.5% (March: -5.4%) as mobile service charges rose 2.4% MoM. Food and beverage inflation moderated to 2.3% (March: 2.5%)—a six-month low—largely due to the Aidilfitri 2025 Festive Season Maximum Price Control Scheme. Prices of fresh meat and fish dropped by 0.7% and 0.2%, respectively.
moderated to 2.3% (March: 2.5%)—a six-month low—largely due to the Aidilfitri 2025 Festive Season Maximum Price Control Scheme. Prices of fresh meat and fish dropped by 0.7% and 0.2%, respectively.
Global Inflation Trends Mixed
Inflation remained uneven across global markets: United States saw inflation ease to 2.3%, the lowest since early 2021. However, core inflation stayed high at 2.8%, leaving the Federal Reserve cautious despite growing speculation over rate cuts.
saw inflation ease to 2.3%, the lowest since early 2021. However, core inflation stayed high at 2.8%, leaving the Federal Reserve cautious despite growing speculation over rate cuts. United Kingdom experienced a spike to 3.5%, a 15-month high, due to Easter-related airfare and utility hikes—dampening expectations of a Bank of England rate cut in August.
experienced a spike to 3.5%, a 15-month high, due to Easter-related airfare and utility hikes—dampening expectations of a Bank of England rate cut in August. China remained in deflationary territory for the third month at -0.1%, although MoM prices rose slightly by 0.1% on stronger holiday spending. Demand concerns linger amid weak retail sales.
remained in deflationary territory for the third month at -0.1%, although MoM prices rose slightly by 0.1% on stronger holiday spending. Demand concerns linger amid weak retail sales.
Outlook: Inflation Seen at 2.7% in 2025
Kenanga maintains its 2025 inflation forecast at 2.7% (2024: 1.8%), with the outlook highly contingent on the government's July fuel subsidy rationalisation plan. Other key domestic drivers include a revised electricity tariff structure under RP4 and a potential hike in nationwide water tariffs.
While some market watchers expect a possible interest rate cut by Bank Negara Malaysia (BNM) in the fourth quarter of 2025, Kenanga sees the central bank holding steady. The Overnight Policy Rate has remained unchanged since mid-2023, and with inflation under control and growth stable, BNM is likely to maintain its current policy stance unless GDP growth slips below 3.5%.
'Delaying necessary reforms to avoid inflation spikes may hurt economic credibility in the long run,' the report concluded, highlighting the balancing act between price stability, fiscal discipline, and sustainable growth. Related
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