US inflation is 3.7% and Malaysia's is 1.8%: why the gap, and what it means for your ringgit
Malaysian headline inflation was 1.8% in September 2026 against 3.7% in the US. Since 2020 Malaysia has been lower in 77 of 78 comparable months. How fuel subsidies, core inflation and the ringgit fit in, and what the gap does and does not tell you.
US inflation has climbed back to 3.7% while Malaysia’s has stayed below 2%. The difference is not new: it has been there for almost every month since 2020. What is new is how much of it now comes from a single item, fuel.
How large is the gap right now?
Malaysian prices rose 1.8% in the year to September 2026, down from 1.9% in August, according to the Department of Statistics Malaysia (OpenDOSM; Bernama). US prices rose 3.7% over the same twelve months, up from 3.4% in August (BLS, 14 October 2026).
Malaysia's headline CPI inflation (1.8%) minus US CPI inflation (3.7%), September 2026, both year on year (CapsWindow calculation from DOSM and BLS)
The two numbers moved in opposite directions last month. In the US, the gasoline index rose 9.1% in September alone and energy 5.2% (BLS). In Malaysia, transport inflation edged up from 2.0% to 2.5%, but housing and utilities slowed from 2.1% to 1.4%, which The Star linked to expanded electricity bill protection for households.
How often has Malaysia been lower since 2020?
Almost always. Comparing year-on-year rates month by month from January 2020 to July 2026, Malaysian inflation was below the US rate in 77 of 78 comparable months (CapsWindow calculation from the DOSM headline index and the US CPI series on FRED).
How often has Malaysia been lower since 2020?
Malaysia, average of monthly rates / US, average of monthly rates
Shared linear scale from zero. Selected entries from the table below. Its dates, units, definitions and limitations still apply.
| Year | Malaysia, average of monthly rates | US, average of monthly rates | Gap |
|---|---|---|---|
| 2020 | −1.14% | 1.25% | −2.39 pt |
| 2021 | 2.49% | 4.68% | −2.19 pt |
| 2022 | 3.38% | 8.00% | −4.62 pt |
| 2023 | 2.50% | 4.15% | −1.65 pt |
| 2024 | 1.83% | 2.95% | −1.12 pt |
| 2025 (11 months) | 1.39% | 2.69% | −1.30 pt |
| 2026 (January-July) | 1.77% | 3.26% | −1.49 pt |
The widest gap was March 2022, when US inflation reached about 8.6% and Malaysia’s was 2.2%, a difference of 6.4 points. The only month Malaysia was higher was April 2021, at 4.7% against roughly 4.1%. That was arithmetic, not overheating: RON95 had been cut to RM1.25 a litre in April 2020 as oil collapsed and was back at RM2.05 a year later (data.gov.my fuel prices), so the twelve-month comparison started from an unusually low base.
The US series in this table is the seasonally adjusted index from FRED, so its year-on-year rates can differ from the BLS headline figures by about 0.1 point. October 2025 is missing from the US series and is left out rather than estimated, which is why 2025 has 11 months.
Why is Malaysian inflation lower?
The clearest reason is that the price most exposed to oil is fixed for most Malaysians. RON95 was held at RM2.05 a litre from February 2021 until September 2025. On 30 September 2025 the government moved to the targeted BUDI95 scheme: eligible citizens pay RM1.99 within a monthly quota, while the unsubsidised price was set at RM2.60 (Ministry of Finance). By 22 October 2026 unsubsidised RON95 had risen to RM4.32, but the BUDI95 price was still RM1.99 (data.gov.my). American drivers have no equivalent buffer, so the 2026 oil shock went straight into US headline CPI.
Bank Negara Malaysia gives a broader explanation. In its September statement it said the pass-through of higher costs “has been contained by domestic policy measures and stable demand conditions amid limited spillover of external sector strength to wages” (BNM, 3 September 2026). The same statement noted that “elevated global commodity prices continue to exert upward pressure on cost conditions”.
The ringgit also matters at the margin. Its monthly average strengthened from 4.0919 per US dollar in December 2025 to 4.0687 in September 2026 (OpenDOSM). A firmer ringgit lowers the ringgit cost of dollar-priced imports, other things equal. We have not found an official estimate of how much this contributed, so we do not put a number on it.
Does core inflation tell the same story?
Partly. Core inflation, which DOSM calculates by excluding items with volatile or government-administered prices (OpenDOSM), was 1.7% in Malaysia in September. US core inflation was 2.6% (BLS).
| September 2026 | Headline | Core | Headline minus core |
|---|---|---|---|
| Malaysia | 1.8% | 1.7% | +0.1 pt |
| United States | 3.7% | 2.6% | +1.1 pt |
| Gap (Malaysia − US) | −1.9 pt | −0.9 pt | — |
So roughly half of the headline gap survives once energy and administered prices are stripped out, and the rest is mainly the fuel shock that Malaysia’s subsidy absorbs. There is also a quieter change inside Malaysia’s own numbers. Through most of 2025 Malaysian headline inflation ran below core (for example 1.1% against 1.8% in June 2025), because administered prices were holding the headline down. Since August 2026 headline has edged above core (1.9% against 1.7%, then 1.8% against 1.7%). That is consistent with BNM’s warning about cost pressures from commodity prices, though one or two months is not a trend.
What does the gap mean for your money?
It means a dollar cost and a ringgit cost have drifted apart. From December 2019 to July 2026 the US consumer price index rose 28.7% and Malaysia’s rose 12.1%, while the ringgit moved from 4.1485 to 4.0825 per dollar, about 1.6% stronger (CapsWindow calculation from the series above).
| A basket bought in December 2019 for RM4,148.50 | Price in July 2026 | Change |
|---|---|---|
| Malaysian basket, priced in ringgit | RM4,650.53 | +12.1% |
| US basket (US$1,000), converted at each month’s ringgit rate | RM5,253.49 | +26.6% |
Purchasing-power reasoning suggests that persistent inflation differences eventually show up in exchange rates: a currency with lower inflation tends to gain over long periods. Since 2019 that has not happened to any great extent; the ringgit is only slightly stronger, so US-priced costs such as tuition, subscriptions or travel have become noticeably dearer in ringgit. Nothing here says when or whether that will change.
For savers, the low rate also shapes the real return on ringgit deposits. With the OPR at 2.75% and September inflation at 1.8%, the simple real policy rate is +0.95 points; in the US it is 4.00% minus 3.7%, or +0.30 points (CapsWindow calculation; see OPR vs the Fed rate, which used August’s 1.9%). To see what a past ringgit amount is worth today under Malaysian CPI, use the calculator.
Check what a past ringgit amount is worth today →
The month-by-month comparison uses the DOSM headline index (not seasonally adjusted) up to July 2026 and the seasonally adjusted US index from FRED, with October 2025 missing on the US side; the September 2026 figures come from separate official releases and are not mixed into the 2020-2026 table. The two baskets are built differently: housing, for example, carries a much larger weight in the US index. Year-on-year rates are rounded to one decimal place in official releases. Nothing here forecasts inflation, interest rates or the ringgit.
Questions & answers
What is Malaysia's latest inflation rate compared with the US?
Malaysia's headline CPI rose 1.8% in the year to September 2026 and core CPI 1.7% (DOSM, released 19 October 2026). In the US, headline CPI rose 3.7% and core 2.6% in September (BLS, 14 October). The headline gap is 1.9 percentage points; the core gap is 0.9 points.
Has Malaysian inflation ever been higher than US inflation since 2020?
Once, in April 2021: 4.7% in Malaysia against about 4.1% in the US (CapsWindow calculation; the official BLS figure was 4.2%). That was a base effect. RON95 had been cut to RM1.25 a litre in April 2020 when oil collapsed and was back at RM2.05 a year later, so the year-on-year comparison jumped. Every other month from January 2020 to July 2026 Malaysia was lower.
Does lower inflation mean the ringgit will strengthen against the dollar?
Not necessarily, and not on any timetable. Purchasing-power reasoning says lasting inflation differences tend to show up in exchange rates over long periods, but trade flows, interest rates and risk appetite move the ringgit far more in the short run. This note does not forecast the exchange rate.
Source
- OpenDOSM - Headline inflation by division (API) ↗
- OpenDOSM - Core inflation (API) ↗
- OpenDOSM - Core inflation, dataset description ↗
- Bernama - Malaysia's inflation at 1.8% in September 2026 (DOSM) ↗
- The Star - September inflation eases slightly to 1.8% as utilities cost moderates (19 October 2026) ↗
- US Bureau of Labor Statistics - Consumer Price Index, September 2026 ↗
- FRED - US CPI, all items, seasonally adjusted (CPIAUCSL) ↗
- data.gov.my - Fuel prices (Ministry of Finance) ↗
- Ministry of Finance - Non-subsidised RON95 set at RM2.60 as BUDI95 commences (29 September 2025) ↗
- Bank Negara Malaysia - Monetary Policy Statement, 3 September 2026 ↗
- OpenDOSM - Exchange rates (BNM, monthly average) ↗