KUALA LUMPUR : Malaysia's inflation fell to 7.6 percent in October on lower petrol and diesel prices as global energy costs eased, government data showed Friday.

The Department of Statistics said the consumer price index was down from 8.2 percent in September after the government cut retail fuel prices, which also helped the monthly transportation index down.

"The decreases were shown in mainly two groups, namely transport and alcoholic beverages and tobacco," it said in a statement.

Inflation for the ten months to October averaged 5.5 percent, the department said.

It said the index for the transport sector contracted by 3.6 percent from September, non-food items were 0.7 percent lower while alcoholic beverages and tobacco fell by 0.1 percent.

Inflation soared to a 26-year high of 8.5 percent in August, after reaching 8.3 percent in July, driven by the high cost of food and fuel after the government raised fuel prices by 41 percent in June to cut its subsidies bill.

The food and non-alcoholic drinks index rose 12.1 percent in October from the same period last year while transportation was the highest at 13.9 percent.

The government has cut fuel prices five times since June, with the most recent on Monday when it reduced petrol prices by 7 percent, bringing pump prices down to 2.00 ringgit (0.56 dollars) per litre.

The moves were in keeping with the trend of falling crude costs.

The government has also cut its 2009 growth forecast to 3.5 percent from its initial target of 5.4 percent amid the global financial crisis. It also revised downward its 2008 GDP forecast to 5.0 percent this year.

Finance Minister and deputy premier Najib Razak has said inflation is expected to average between three to four percent next year if crude oil prices continued to drop.

- AFP /ls