What specific core inflation items saw a decrease in June, and why?

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Core Inflation Items Decreased in June Due to Base Effects and Global Gold Prices

Malaysia's headline inflation eased to 1.9 per cent in June, a slight moderation from 2.0 per cent in May, largely influenced by a decrease in core inflation. This decline in core inflation was primarily attributed to base effects stemming from the increase in streaming services inflation observed in June of the previous year. Additionally, lower inflation rates for jewellery and watches contributed to this moderation, influenced by softer global gold prices.
Base Effects Impacted Streaming Services Inflation

The moderation in core inflation was significantly influenced by base effects related to streaming services. Specifically, the increase in inflation for streaming services in June 2025 created a higher comparison point for June 2026. When the inflation rate for June 2026 is calculated, the previous year's higher rate serves as the base, which can lead to a lower reported inflation rate for the current period, even if prices themselves did not fall. In economics, base effects refer to the impact that the inflation rate of a previous period has on the current inflation rate calculation.
Jewellery and Watch Inflation Eased Amidst Global Gold Price Trends

Inflation for jewellery and watches also saw a decrease in June, a trend linked to softer global gold prices. While the provided information does not detail other factors influencing jewellery and watch prices beyond gold, global commodity prices, including gold, are a primary driver for these goods. Fluctuations in the international market value of gold directly impact the cost of raw materials for jewellery and, consequently, the retail prices of these items.
Core Inflation Components Generally Exclude Volatile Items

Core inflation typically aims to measure underlying price pressures by excluding certain volatile components. Generally, these exclusions include items with prices that can fluctuate rapidly and significantly, such as food and energy. The intention is to provide a clearer picture of the persistent inflationary trends in the economy. While the provided text does not list the typical components of core inflation in Malaysia, this exclusion principle is a common practice in monetary policy analysis.

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What specific core inflation items saw a decrease in June, and why?

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