Producer Price Index hits new record in October

KUALA LUMPUR: The Producer Price Index (PPI) for local production surged 13.2 per cent year-on-year (y-o-y) in October 2021 to hit a new record high, mainly due to higher commodity prices, said the Department of Statistics Malaysia.

The index, which measures the costs of goods at exfactory prices in the local economy and indicates the inflation from the producers’ perspective, showed a 3.6 per cent y-o-y drop in the same month of the preceding year.

Chief statistician Datuk Sri Mohd Uzir Mahidin said the increase in October 2021 was attributed mainly by mining index that soared 82.9 per cent in contrast to a 43.5 per cent decline in October 2020, driven by higher prices for petroleum and natural gas commodities.

“Moreover, the increase in PPI local production was also supported by the agriculture, forestry and fishing index that moved up 24.8 per cent, followed by the manufacturing index (7.9 per cent).

“The utility index registered an increase of 0.7 per cent for electricity and gas supply index, while the water supply index recorded a marginal drop of 0.7 per cent,” he said in a statement yesterday.

Mohd Uzir said in terms of a month-on-month comparison, the PPI local production rose one per cent in October 2021.

“The increase was contributed by a 5.5 per cent rise in the mining index which is foreseen to remain in an upward trend until the end of this year due to positive global economic recovery as demand bounces back despite tightened supply especially during winter,” he said.

In addition, the agriculture, forestry and fishing index increased 1.2 per cent contributed by higher price for oil palm fresh fruit bunches.

“The price for this commodity increased for the fourth consecutive month in October 2021, largely underpinned by subdued production due to ongoing migrant labour shortage,” he said.

Meanwhile, Mohd Uzir said the manufacturing index edged up 0.4 per cent supported by indices for the manufacture of vegetable and animal oils and fats (1.5 per cent), manufacture of refined petroleum products (0.6 per cent) and manufacture of electronic components and boards (0.1 per cent) subsectors.

The electricity and gas supply as well as water supply indices also recorded an increase of 0.4 per cent and 0.1 per cent, respectively.

Mohd Uzir said the rise in commodity prices in October 2021 contributed to the spike in the index of crude materials for further processing, which recorded a new high with a 40.4 per cent y-o-y increase in October 2021 compared to negative 13.2 per cent in October 2020.

However, he said, the index of finished goods registered a decrease of 0.5 per cent due to a drop in capital equipment index (-2.9 per cent).

He added that the PPI was expected to remain high for the remainder of the year due to the continued increase in input costs mainly in the prices of crude oil and natural gas.

Moreover, the increase in PPI local production was also supported by the agriculture, forestry and fishing index that moved up 24.8 per cent, followed by the manufacturing index (7.9 per cent).

Datuk Sri Mohd Uzir Mahidin