Malaysia's inflation rate, as measured by the consumer price index (CPI), rose 3.7 percent in August, above market expectations of 3.4 percent.

Malaysia's statistics department said in a statement Wednesday that the increase was mainly due to higher transport, food and non-alcoholic costs.

Transport index surged 11.7 percent year-on-year, as the average price of RON95 petrol was 2.12 ringgit (0.51 U.S. dollar) per liter in August, compared to 1.75 ringgit in a year ago.

Meanwhile, food and non-alcoholic beverages index that accounted for 30.2 percent of the CPI weights, rose 4.3 percent year-on-year.

Based on a seasonally adjusted term, the overall CPI for August increased 0.9 percent compared to July 2017.

The core inflation rose 2.4 percent in August compared with the same month of the previous year.

For the period January to August, CPI grew 3.9 percent year-on-year compared with the same period last year. The index for food and non-alcoholic beverages was the main contributor to the increase, up 4.2 percent year-on-year.

"Despite there was some inflationary pressure in August mainly due to fuel prices, the core inflation rate remains stable," RHB Research Institute's economist Peck Boon Soon told Xinhua.

He maintains his full year inflation forecast at 3.5 percent as fuel prices are likely to stabilize at current level.

ANZ Research's economist Ng Wei Wen said in a note Wednesday, the accelerated headline inflation in August, largely reflecting a faster pace of increase in transport costs and food prices.

"Barring a sustained rise in crude oil prices, we expect headline inflation to ease in the coming months," he said, adding that there is no pressure for Malaysian central bank to retreat from its accommodative policy stance considering ringgit stability and soft U.S. Treasury yields.