Government data for Wednesday shows Malaysia's consumer price index is at its fastest pace in more than a year since the effects of changes in tax policy imposed last year no longer exist. Inflation is low as the unproductive consumption tax was eliminated in June 2018 and shipping costs fell due to government efforts in domestic fuel prices.
The consumer price index rose 1.5% from last year in June, the fastest since May 2018, when it rose 1.8%. A Reuters poll had forecast a 1.6% rise.
The annual inflation rate had remained unchanged at 0.2% for the past three months.
Inflation in June saw increases in 10 out of the 12 groups tracked in the index, particularly household furnishings and equipment, recreational services, and utilities, data from the Statistics Department showed.
But data shows that shipping costs and clothing are down.
In May, the Bank of Malaysia cut its interest rate for the first time since 2016 due to low inflation and concerns about slow economic growth.
Inflation is likely to remain moderate amid slowing global economic growth, analysts have said.
"We see average annual inflation this year staying close to the low end of the central bank's 0.7-1.7% forecast range ... allowing enough policy space for the BNM if it needs to cut rates further," ING said in a note ahead of the CPI data.