Selangor Journal

MIDF sees lower cost pressures for Malaysia’s producers

KUALA LUMPUR, Jan 31 — MIDF Research sees lower cost pressures for Malaysia’s producers, especially with declining global commodity prices as well as easing global supply chain disruptions.

The reopening of China and the better supply of labour and materials globally will provide further support, it said.

The research house said this in response to Malaysia’s Producer Price Index (PPI) rising 3.5 per cent in December 2022 compared to the 3.2 per cent expansion in November.

The PPI measures the prices of goods at the factory gate.

However, the higher interest rates in major economies, elevated energy prices, and continuous geopolitical tensions would continue to be downside risks to global inflation in 2023, according to MIDF.

The research house noted that the PPI of 3.5 per cent in December was slightly higher than the 21-month low recorded in the previous month’s 3.2 per cent. On a month-on-month basis, the input inflation fell by 0.3 per cent. The moderating price pressures on producers were mainly due to the persistent contraction of crude materials cost and moderation of intermediate materials cost, it added.

The inflation of crude materials stayed contractionary since August 2022 while the cost growth of intermediate materials moderated to a 19-month low at 7.2 per cent y-o-y in the final month of 2022, it noted.

“We believe the persistent contraction in the inflation of crude materials is due to the mild correction of global energy prices whereas the improvement in intermediate materials cost inflation was partly due to the easing global supply chain pressures,” it added.

For 2022, overall PPI inflation was recorded at 7.8 per cent, lower than the peak point of 9.5 per cent in 2021.

— Bernama

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