KUALA LUMPUR, Aug 29 — The contractionary trend of Malaysia’s producer price index (PPI) indicated further moderation in overall inflationary pressure, and given the high base effect of commodity prices, the producer’s output deflation was within expectations, said MIDF Research.
In a note today, it said Malaysia’s producers’ prices deflated for the sixth consecutive month in July 2023, declining by 2.3 per cent year-on-year, and this contraction continued as manufacturing input prices deflated by 2.1 per cent year-on-year, the steepest in three-month.
“Goods-producing prices for the manufacture of food and the manufacture of coke and refined petroleum were among the key downward factors. Producers’ inflation for the mining sector also contracted by 10.8 per cent year-on-year compared to June 2023: which was 16.6 per cent year-on-year,” the research house said.
Meanwhile, MIDF shared that the production cost for agriculture, forestry and fishing ended one year of contractionary sequence, expanded by 3.6 per cent year-on-year from -20.4 per cent year-on-year in June 2023:.
The electricity and gas prices also rose at the softest pace in three months at 0.1 per cent year-on-year while inflation for water supply eased to 3.1 per cent year-on-year from 3.2 per cent year-on-year in June 2023, it said.
By the processing stage, it pointed out that prices for crude materials dropped by 6.3 per cent year-on-year from -18.7 per cent year-on-year for June 2023, attributable to the decline in prices of non-food materials.
“Cost for intermediate materials, supplies and components declined by 3.3 per cent year-on-year, the largest drop in four months,” it said.
On the other hand, MIDF said that growth in prices for finished goods inched up by 3.4 per cent year-on-year from 3.3 per cent year-on-year in June 2023.
On a month-on-month basis, the research house highlighted that the PPI rose 0.2 per cent month-on-month after a decline of 0.3 per cent month-on-month last month.
However, MIDF pointed out that it is worth monitoring the persistent increase in food price pressure.
“Even though overall PPI deflated, input inflation for foodstuffs and feedstuffs surged to a 19-month high at 6.6 per cent y-o-y in July 2023. As of the seventh month of 2023, the food PPI grew by 5.2 per cent against overall 2022’s 3.4 per cent.
“We expect food inflation pressure to remain elevated in the second half this year as Malaysia, being a net food importer, to be affected negatively amid climate change impacts and external developments on food export policies,” it added.
— Bernama
