KONTAN.CO.ID - KUALA LUMPUR. Malaysia's consumer prices rose in June at their fastest pace in more than a year, government data showed on Wednesday, as the effects of tax policy changes introduced last year faded.

Inflation has been mild since an unpopular consumption tax was scrapped in June 2018, while transport costs have declined amid a government effort to cap domestic fuel prices.

The consumer price index climbed 1.5% from a year earlier 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.

Costs, however, were down in the transport and clothing sectors, the data showed.

In May, Malaysia's central bank cut its key interest rate for the first time since 2016, amid low inflation and concerns over slowing economic growth.

Bank Negara Malaysia (BNM) has said it expected headline inflation to be broadly more stable compared to 2018.

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. 

Editor: Wahyu T.Rahmawati