2nd July 2026 - 2 min read
Malaysia’s headline inflation rose to 2% in May, up slightly from 1.9% in April, according to Bank Negara Malaysia’s monetary and financial developments release. Core inflation, which leaves out items with prices that jump around or are set by the government, held steady at 2%.
Average retail prices of RON97 and diesel both fell in May, to RM4.81 and RM5.01 per litre respectively, down from RM5.06 and RM5.92 in April. Domestic air travel also got cheaper over the month.
Subsidised RON95 stayed fixed at RM1.99 per litre for eligible Malaysians, so the relief was felt mainly by those filling up on RON97 or paying market rates for diesel, rather than the majority pumping subsidised RON95.
What pushed inflation up instead was the cost of non-core items, mainly vegetables and electricity. The electricity increase is the one that stands out, because it reflects the monthly fuel adjustment on bills turning into a surcharge for the first time since the current tariff structure began.
Under the Automatic Fuel Adjustment that replaced the old six-monthly system in July 2025, bills carry a monthly rebate or surcharge based on fuel costs. Every month since then had been a rebate, until May, when the Energy Commission set it at a surcharge of 1.38 sen per kWh as generation costs rose.
The charge applies only to households using more than 600 kWh a month, so heavier users, such as homes running air-conditioning regularly, are the ones who felt it. Although hopefully they felt cooler too!
For many households, May offered mixed news. Lower RON97 and diesel prices reduced fuel costs for some motorists, but higher electricity bills for heavier users and more expensive vegetables offset part of those savings. With electricity now adjusted monthly, household bills may fluctuate more often than before.
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Iman writes about personal finance with curiosity. She is interested in the stories behind money, the hesitation around big decisions, and the small habits that shape financial futures. Off the clock, she is either dissecting a film or climbing her way up the leaderboard in her favourite games.
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