Tuesday 06 Jun 2023
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KUALA LUMPUR (Jan 30): Malaysia’s producer price index (PPI), which measures the prices of goods at the factory gate, has increased to 3.5% year-on-year (y-o-y) in December 2022, the Department of Statistics Malaysia (DOSM) reported.

The index declined 0.3% month-on-month (m-o-m) as compared to a m-o-m increase of 0.6% in November. Observing the y-o-y percentage changes since May 2022, there is a slowdown of PPI. Overall, the PPI increased at 7.8% in 2022 versus 9.5% in 2021.

DOSM said that y-o-y, manufacturing sector increased 6.1% (Nov 2022: 6.2% y-o-y) due to the increase in the indices of manufacture of coke and refined petroleum products (14.2%), followed by the manufacture of computer, electronics and optical products (9.3%), and the manufacture of chemicals and chemical products (3.1%).

The mining sector also registered an increase of 3.7% (Nov 2022: 2.4% y-o-y), the water supply sector an increase of 3.8% (Nov 2022: 4.2% y-o-y), and the electricity and gas supply sector an increase of 1% (Nov 2022: 1.4% y-o-y), the DOSM said in a statement on Monday (Jan 30).  

The agency said only the agriculture, forestry and fishing sector recorded a decrease of 17.5% in December 2022 versus a decline of 18.5% y-o-y in Nov 2022.  

“The contraction in the index of growing of perennial crops (27.3%), which recorded a double-digit decline for six consecutive months, contributed to the decrease in this sector,” the DOSM said.

Commenting on the PPI by stage of processing, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the index of crude materials for further processing continued to decrease by 7.7% y-o-y in December 2022 (Nov 2022: -8.5% y-o-y) due to a decline of 9.4% in the non-food materials segment.  

“However, [the index of] intermediate materials, supplies and components increased 7.2% in December 2022 (Nov 2022: 7.7%) owing to the increase in the processed fuel and lubricants (15.3%), supplies (12.4%) and materials and components for manufacturing (2.8%).

“[The index of] finished goods also posted an increase of 4.4% (Nov 2022: 3.3%) due to the increase in capital equipment (5.2%) and finished consumer goods (3.3%) indices,” he said.  

PPI decreases 0.3% m-o-m in Dec 2022

Mohd Uzir said the PPI local production decreased 0.3% m-o-m in December 2022 as compared to 0.6% in the previous month.

“This was owing to the decrease in agriculture, forestry and fishing index to1.7% in December 2022 (Nov 2022: 5.5% m-o-m), attributed to the decrease in the indices of fishing (5.6%) and growing of perennial crops (2.2%). Moreover, the prices of oil palm fresh fruit bunches also decreased 2.4%,” he said.  

The mining sector decreased 3% (Nov 2022: 0.5% m-o-m) due to the decrease in extraction of crude petroleum index by 4.3%, and the electricity and gas supply sector declined 0.3% (Nov 2022: -0.1% m-o-m), Mohd Uzir said.  

Meanwhile, he said the manufacturing sector remained unchanged (Nov 2022: 0.2% m-o-m), and the water supply sector recorded a slight increase of 0.2% (Nov 2022: 0.2% m-o-m).

In the fourth quarter of 2022 (4Q2022), the DOSM said the PPI recorded an increase of 3.5% (3Q2022: 6.5%) due to the increase in sectors of manufacturing (6.6%), water supply (4.3%), mining (1.8%) and electricity and gas supply (1.2%). Meanwhile, the agriculture, forestry and fisheries index fell 18.1%.  

PPI increases 7.8% in 2022

Overall in 2022, DOSM reported that the PPI increased 7.8%, slightly lower than 2021’s 9.5%.  

Mohd Uzir said the PPI has accelerated in the first half of 2022, supported by the increase of Malaysia's main commodities’ prices, specifically crude palm oil and crude oil due to the geopolitical pressure between Russia and Ukraine.

He said the increasing cost of animal feed and fertiliser also contributed to the increase in the PPI.

“However, PPI began to moderate in June 2022 due to the decline in crude palm oil price that reached RM3,000 in the second half of 2022. This was partly due to the lower global demand resulting from the opening of Indonesia’s palm oil exports and demand for vegetable oils.

“Nevertheless, finished consumer food prices showed an upward trend as compared to 2021 in spite of the moderation starting in November 2022 owing to high raw material costs. The increase in input cost will affect the cost of food at consumer level,” he said.  

Moderate increase in PPI among selected countries

Mohd Uzir said inflation at the producer level in December 2022 for selected countries showed moderate increase as compared to November 2022.  

“The US posted an increase of 6.2% (Nov 2022: 7.3%) due to the increase in index of eggs for fresh use (191.8%) and fresh and dry vegetables (92.3%), but was balanced by a decline in liquefied petroleum gas index (10.1%) and gasoline index (5.9%).

“Asian countries like China recorded a decrease of 0.7% in December 2022 (Nov 2022: -1.3%) attributed to the processing industry, [which recorded a decrease of 2.7%]. Meanwhile, Japan recorded an increase at a rate of 10.2% and India an increase of 5.0%,” he said.  

He said adverse weather conditions, particularly in major suppliers’ areas, impacted the supply of vegetables and sea products.  

“The worsened flood situation at certain plantation areas affected the produce of vegetables products, while the turbulent sea and high tide influenced the productivity process in the sea. The seasonally lower output due to the monsoon season may lift the prices higher at the consumer level,” Mohd Uzir said.

Edited ByIsabelle Francis
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