Economist Geoffrey Williams said global factors, such as the decline in oil prices, have also had a hand in bringing the inflation rate down.

“We are finally seeing the impact of lower oil prices and reduced supply chain costs coming through as expected,” he said.

Crude oil price has dropped below US$70 a barrel, compared with more than US$90 last year.

Williams was responding to an FMT report that the inflation rate has declined from 2.8% last year to 2.4% in June, its lowest this year.

The report, citing data release by the statistics department, said the slower increase in the country’s inflation in June was driven by restaurants and hotels, food and non-alcoholic beverages as well as furnishings, household equipment and routine household maintenance.

Williams, who is provost at Malaysia University of Science and Technology, said inflation in Malaysia is now “very much below regional and global peers”.

Given these improvements, he said, it is no longer necessary to raise food prices, which businesses had threatened to do last month.

“Price rises have slowed across almost all categories, but not restaurants and food products which have been quite stubborn,” he said.

Williams said the cost of internet and mobile communication services are also getting cheaper, a sign that prices are moderating.

“We expect inflation to continue to slow in the next months or so and to remain low for the rest of the year,” he said.

“This is good news for the economy and it suggests that no further action is required through the overnight policy rate (OPR),” he said.

“Instead, the focus can be on stabilising growth against a slower global economy,” he added.

Bank Negara Malaysia last raised the OPR by 25 basis points in May to 3% but at its next meeting in July, it decided to pause rate increases.