Malaysia's annual inflation rate eased to 1.8% in July from 1.9% in June, with the Consumer Price Index rising to 137.1 points from 134.7 a year earlier and coming in slightly below the 1.9% median forecast in a Reuters poll of economists. Transport remained the main driver of inflation, but its annual increase slowed to 1.4% from 2.8% and transport costs fell 1.1% on the month, helping offset faster gains in food and beverages, which accelerated to 1.8% from 1.4%, and in information and communication, which rose to 3.4% from 2.4%. Inflation also moderated in several other categories, including insurance and financial services, personal care and miscellaneous goods and services, restaurant and accommodation services, education and health. About 65.3% of items in the CPI basket recorded price increases, though 98.1% of those gains were 10% or less. Seven states posted inflation above the national average, led by Negeri Sembilan at 2.5%. Headline inflation was flat on a monthly basis, suggesting price pressures remained contained even as gains across much of the basket pointed to steady underlying demand.