Inflation rate held steady for the sixth consecutive month in January, with the consumer price index (CPI) at 3.2 percent year-on-year from 3.1 percent in December, data showed Wednesday.

On a monthly basis, consumer prices rose by 0.5 percent in January from December, the Statistics Department said.

The country's central Bank Negara on Monday kept its key interest rate unchanged at 3.50 percent for the seventh time in a row, citing easing inflation among the reason.

It said the outlook on inflation was "relatively benign", and that average inflation was expected to be significantly lower than in 2006, which saw consumer prices increase by 3.6 percent compared to 2005.

Malaysia's inflation rate reached a seven-year high of 4.8 percent in March 2006 after the country saw a steep rise in fuel prices.

It eased back to 4.6 percent in April and 3.9 percent in May before slowing to 3.3 percent in August, holding steady since then.