Headline inflation edged up while core inflation eased slightly in April
- In April, headline inflation edged up to 1.9 per cent (March 2026: 1.7 per cent) while core inflation[1] eased slightly to 2 per cent (March 2026: 2.1 per cent).
- The uptick in headline inflation is as expected and mainly reflected higher retail fuel prices (particularly for RON97 and diesel in Peninsular Malaysia), in line with higher global oil prices.
- The impact of higher global oil prices on fuel inflation was moderated by continued targeted subsidies on RON95 and diesel.[2]
- This was partly offset by slower inflation in jewellery and watches amid lower global prices for gold, platinum and silver.
Trade surplus widens on strong export performance, led by E&E
- The trade surplus increased to RM28.8 billion (March 2026: RM24.6 billion), driven by strong exports that more than offset the rise in imports.
- Exports grew strongly by 36.9 per cent (March 2026: 8.3 per cent), driven by:
- Strong E&E exports (46.4 per cent; March 2026: 15 per cent), particularly semiconductors (65.4 per cent; March 2026: 34.8 per cent) and office machinery parts (228.7 per cent; March 2026: 7.7 per cent) amid sustained global tech demand.
- Non-E&E exports also strengthened (33.2 per cent; March 2026: 3.8 per cent), supported by higher petroleum product prices.
- Imports growth expanded to 20 per cent (March 2026: 10.4 per cent) amid higher re-export activities.
Higher growth in credit to the private non-financial sector
- Credit to the private non-financial sector grew by 5.8 per cent (March 2026: 5.6 per cent), driven by higher growth in outstanding business loans (6.3 per cent; March 2026: 5.7 per cent) and outstanding corporate bonds (6.1 per cent; March 2026: 5.8 per cent).
- Business loan growth increased following higher loan growth among non-SMEs, particularly for working capital purposes. Meanwhile, growth for investment-related[3] loans remained forthcoming across both SMEs and non-SMEs.
- Household loan growth was sustained at 5.5 per cent (March 2026: 5.4 per cent) amid steady loan growth across most purposes.
Banks’ asset quality remained intact
- Gross and net impaired loans ratios continued to be stable at 1.4 per cent and 0.9 per cent, respectively.
- Loan loss coverage ratio (including regulatory reserves) remained prudent at 125.4 per cent of gross impaired loans (March 2026: 124.8 per cent).
Banks maintained sufficient liquidity buffers to withstand against liquidity shocks
- The banking system continued to record healthy liquid asset buffers with an aggregate Liquidity Coverage Ratio of 152.8 per cent (March 2026: 144.6 per cent).
Global and domestic financial markets benefited from improved sentiment following a ceasefire in the war in the Middle East
- Global financial markets were lifted by improved risk sentiment following a ceasefire in the Middle East war during the month. This was accompanied by a weakening of the US dollar and some easing in global financial conditions.
- Against this backdrop, the ringgit appreciated by 1.7 per cent against the US dollar (NEER:[4] 0.9 per cent; regional average:[5] 0.2 per cent), supported by net foreign inflows into domestic bond and equity markets.
- Domestic bond and equity markets rebounded during the month, in line with regional movements. The 10-year MGS yield declined by 6 bps (regional average: -3.5 bps) while the FBM KLCI rose by 1.9 per cent (regional average: 6.2 per cent).
[1] Core inflation is computed by excluding price-volatile and price-administered items.
[2] In April 2026, Malaysian users were eligible for a subsidised RON95 price of RM1.99/litre up to 200 litres under the BUDI95 programme. Diesel users in Sabah and Sarawak continued to pay a subsidised price of RM2.15/litre.
[3] Comprises loans for the purchase of non-residential properties, residential properties for business use, fixed assets as well as for construction activities.
[4] NEER refers to the ringgit nominal effective exchange rate, which measures the ringgit’s movement against a basket of currencies of Malaysia’s major trading partners.
[5] Regional countries comprise Singapore, Thailand, the Philippines, Indonesia and Korea
—BNM
