Malaysia’s producer prices down to 1.4% in May, excluding the effects of diesel subsidy rationalisation Malaysia’s Producer Price Index (PPI) increased by 1.4% yoy in May 2024, from 1.9% in the previous month, said the Department of Statistics Malaysia (DoSM). On a monthly basis, the PPI local production decreased by 0.9%, reversing from the 0.5% increase recorded in April 2024.
Looking at he PPI data, MIDF said the the increase continued to suggest rising cost pressures for the local companies for the 3rd straight month. The moderation in May-24 was mainly attributed to softer PPI inflation in the agriculture, forestry, & fishing (May-24: +1.3%yoy; Apr-24: +5.4%yoy) and mining (May-24: +6.6%yoy; Apr-24: +10%yoy) sectors.
In contrast, manufacturing costs picked up to +1.0%yoy (Apr-24: +0.8%yoy), in line with the higher prices of electricity and gas supply (May-24: +1.5%yoy; Apr-24: +1.0%yoy) and water supply (May-24:+8.7%yoy; Apr-24: +7.2%yoy), following the water tariff hike in Feb-24. At the moment PPI inflation remains below CPI, posing limited pressures to pass on price increases to consumers. However, we foresee businesses may hike selling prices following the recent hike in diesel prices.
On that note, the house said it is keeping projection that the headline CPI inflation will be higher at +2.7% in 2024 (2023: +2.5%), considering the effect of policy changes such as increases in utility charges, the phased implementation of targeted fuel subsidies and expectations of moderating food price growth.
