BNM: Headline inflation eases to 1.1% in June; core rate holds steady

MALAYSIA’S headline inflation continued to moderate in June 2025, falling to 1.1 per cent from 1.2 per cent in May, while core inflation held steady at 1.8 per cent, according to Bank Negara Malaysia (BNM).

In a statement released today, the central bank said the slower pace of overall inflation was largely driven by lower prices in non-core components such as fresh food, diesel, and domestic airfares.

“Higher inflation in selected core items such as food away from home and streaming services was broadly offset by lower inflation in mobile communication services and video game consoles,” BNM noted.

Credit to the non-financial private sector grew by 5.2 per cent in June (May: 5.4 per cent), supported by sustained loan growth of 5.5 per cent, although corporate bond growth eased to 4.3 per cent from 4.7 per cent previously.

“Business loan growth remained generally stable at 4.5 per cent, underpinned by continued expansion in investment-related lending, particularly among small and medium enterprises (SMEs),” the bank added.

Meanwhile, household loan growth held firm at 6.0 per cent in June, with lending expanding across various purposes.

Against a backdrop of global uncertainty, the ringgit appreciated by 0.5 per cent against the US dollar, while the nominal effective exchange rate (NEER) fell marginally by 0.2 per cent, compared to a regional average of a 0.3 per cent increase.

BNM added that the central bank and the government remain aligned in promoting foreign exchange inflows.

In capital markets, the FBM KLCI rose 1.6 per cent in June, in line with regional equity trends (regional average: 1.5 per cent). Yields on 10-year Malaysian Government Securities fell by five basis points, compared to a regional average of a 11.5-basis point decline.

Malaysia’s banking system remained sound and well-capitalised, with liquidity buffers intact. The liquidity coverage ratio stood at 160.6 per cent in June, while the aggregate loan-to-fund ratio held firm at 83.3 per cent.

Gross impaired loan ratios declined to 1.4 per cent, while net impaired loans remained steady at 0.9 per cent.

“The loan loss coverage ratio, inclusive of regulatory reserves, remained prudent at 130.3 per cent,” BNM said. - July 31, 2025