Producer price index rises to record level
Factory prices up 6.5% year-on-year in December
PETALING JAYA: The Malaysian producer price index (PPI) increased at its fastest pace on record in December on higher price of crude oil and the weaker ringgit.
Factory prices surged 6.5% year-on-year (y-o-y) in December, as prices in agriculture, forestry and fishing saw the largest jump at 34.5%.
“The PPI for local production by stage of processing increased 6.5% y-o-y amid a 29.5% increase in crude materials and 2.7% hike in intermediate materials, supplies and components, while the finished goods indices dropped by 0.1%,” the Statistics Department said yesterday.
Due to stronger crude oil prices, crude materials for further processing saw an 18.8% jump from 10.7% in November 2015 to 29.5% last month.
The Statistics Department statement revealed that all sectors showed a y-o-y increase, with mining at 11.6%, manufacturing 3.7% and electricity and gas 3.5%, except for water supply, which remained stagnant at 0.4%.
The mining sector rebounded from -4.8% in November 2015 to 11.6% in December 2016, while the agriculture, forestry and fishing sector increased 7.8% to 34.5% in December, from 26.7% in November 2015.
On a month-on-month (m-o-m) basis, the PPI for local production grew 3.6%, driven by a 19.3% hike in the mining index.
The agriculture, forestry and fishing index posted the biggest gain of 7.9% m-o-m, followed by manufacturing at 1.8%, electricity and gas 0.4% and water supply 0.4%.
Meanwhile, inflation rate in Malaysia rose 1.8% in December from a year ago, driven by higher food and fuel prices, but the pace of the consumer price increase was slower than what the market had projected.
The Statistics Department said the indices for food and non-alcoholic beverages went up 3.7%, while housing, water, electricity, gas and other fuels saw a 2.1% jump.
But the increase in the consumer price index (CPI) was mitigated by lower prices of communication, transport and clothing.
“Core inflation rose 2.1% in December 2016 compared with the same month of the previous year,” the department said.
The department said that based on a seasonally adjusted term, the overall CPI for December 2016 remained unchanged at 116.9 as compared with November 2016.
On a monthly basis, the index for food and non-alcoholic beverages increased 0.6% in December 2016 following an increase of 1.0% in November 2016. The index for non-food fell 0.3% in December 2016 compared with November.
Bank Negara had said inflation would average higher this year due to stronger oil prices. It maintained the benchmark overnight policy rate at 3% on Jan 18.
Meanwhile, the weaker ringgit and higher price of crude oil had fuelled the increase in factory prices.