Malaysia’s producer price index slips 1.3% in December
PPI local production went down by 1.9% in 2023 the first decline since 2020, on lower commodity prices
PETALING JAYA: Malaysia’s producer price index (PPI), which measures the prices of goods at the factory gate, continued to decrease in December 2023, recording negative 1.3% compared with negative 1.5% in the previous month, the Department of Statistics Malaysia (DoSM) reported yesterday.
Chief Statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said the decrease was attributed to the mining sector which was negative 3.4% (November: -4.7%), dragged down by declines in the extraction of natural gas (-7.8%) and the extraction of crude petroleum (-1.9%) indices.
The manufacturing sector continued to drop – negative 1.5% in December against negative 1.4% in November, attributed to manufacture of coke and refined petroleum products (-12.3%) and manufacture of food products (-4.2%) indices. The electricity and gas supply sector went down by 0.6%, similar to the previous month.
However, the agriculture, forestry and fishing sector increased by 1.3% after a negative 0.4% in November due to an incline in the animal production (6.3%) and the fishing (3.8%) indices. At the same time, the water supply index went up 0.4% in December.
“On a monthly basis, PPI local production further decreased by negative 0.2% in December 2023 as compared to negative 0.7% in the previous month. With the exception of the agriculture, forestry & fishing sector which remained unchanged, all other sectors recorded a decline in this month. The mining sector fell negative 1.6% (November 2023: -4.7%) with the extraction of crude petroleum (-5.1%) index posting a decrease,” said Mohd Uzir.
At the same time, the manufacturing sector declined 0.1% (November: -0.5%), affected by the index of manufacture of coke and refined petroleum products (-1.8%) and manufacture of food products (-0.4%). For the utility sector, electricity and gas and water supply indices decreased by 0.3% and 0.4%, respectively.
Mohd Uzir said, “The crude materials for further processing index increased by 0.4% in December 2023 (November 2023: 0.3%), with the foodstuffs and feedstuffs index posting an increase of 4.3%. The finished goods index inclined by 1.1% (November: 1.7%), contributed by an increase in capital equipment (2%). By contrast, the intermediate materials, supplies and components index decreased by 3% (November: -3.4%) due to processed fuel and lubricants (-13.8%) and materials & components for manufacturing (2.2%) indices.”
In 2023, Mohd Uzir said, the PPI local production went down by 1.9% after an increase of 7.8% in 2022.
“This was the first decrease since 2020 due to the lower prices of Malaysia’s main commodities. Commodity prices in 2023 were perceived as highly uncertain due to price volatility, especially in energy markets. Crude oil prices have also experienced volatility due to a series of oil output cuts by the Opec+ and supply concerns related to the Israel-Hamas war. The intensifying geopolitical risks, including the potential for the war to escalate, could increase volatility in global energy supplies and prices,” he added.
Commodity prices, as measured by the World Bank’s commodity price index, are projected to decline by 4% in 2024 after falling by nearly 24% in 2023, the steepest decline since the Covid-19 pandemic. Energy prices are projected to fall in 2024 and remain relatively flat in 2025. Agricultural prices are projected to decline throughout 2024 and 2025. Geopolitical risks are projected to have a limited effect on commodity prices in 2024, though they remain elevated.