Producer price index contracts in Jan
THE manufacturing producer price index (PPI) contracted in January, the Philippine Statistics Authority (PSA) reported on Friday.
The 1.0-percent drop was a reversal from December’s 0.6-percent increase. A year earlier, the index grew by 4.8 percent .
“The negative annual growth rate of PPI in January 2024 … was primarily due to the deceleration of the annual growth rate of manufacture of computer, electronic and optical products industry division at 1.7 percent in January 2024 from 3.7 percent in December 2023,” the PSA said in a statement.
The manufacture of computer, electronic and optical products contributed 38.7 percent to the downtrend in PPI growth, it added. Out of 22 manufacturing divisions, this has the second-highest weight in the computation of the PPI.
Other significant factors driving the downward trend in the annual growth of the PPI in January included a deceleration in the annual rate of manufacture of beverages to 7.6 percent in January 2024 from an 11.7-percent annual increment in December 2023.
Additionally, there was an annual decline in the manufacture of fabricated metal products, except machinery and equipment, at 3.1 percent during the period from a 2.7-percent annual increase in the previous month.
Out of the 19 industry sectors, 13 experienced yearly drops in activity over the period, while six sectors saw yearly growth in the month. The most substantial yearly decrement was noted in the manufacture of chemicals and chemical products at 6.1 percent.
In January this year, there was a 1.0-percent decrease in the month-on-month manufacturing PPI, following the 0.1-percent monthly decline in December. Moreover, the January 2023 PPI recorded a 0.6-percent uptick.
The leading factor behind the monthly decrease in PPI during the period was the manufacture of fabricated metal products, except machinery and equipment, with a monthly drop of 3.0 percent during the period from a 0.4-percent month-on-month increase in the previous month.
Rounding up the top three contributors driving the monthly decline in the manufacturing PPI were the manufacture of computer, electronic and optical products (a drop of 1.1 percent during the month from a 0.6-percent monthly decrease in December 2023), and other manufacturing, and repair and installation of machinery and equipment (- 0.3 percent from 0.5-percent increase).
“These three industry divisions contributed 87.0 percent to the faster month-on-month decrease of PPI for manufacturing in January 2024,” the PSA said.
Furthermore, 10 registered monthly increments, while six exhibited month-on-month declines, and three recorded a zeropercent growth rate during the period.
Commenting on the latest PPI results, Rizal Commercial Banking Corp. chief economist Michael Ricafort said that producer prices remained relatively slow in January largely due to higher base effects and low global crude oil prices.
“Better weather conditions in the latter part of 2023 with an unusually lower number of typhoons that hit the country also led to some improvement in agricultural output that led to some easing of food prices, thereby leading to a relatively slower year-on-year increase in PPI up to early 2024,” he added.