December producer price index surges 6.5%

Huge jump in the agriculture, forestry and fishing index pushed the PPI up

KUALA LUMPUR: Malaysia's Producer Price Index (PPI) for December 2016 surged 6.5% from a year ago, mainly due to a higher cost of production in agriculture, forestry and fishing, the Statistics Department said.

It said on Tuesday the agriculture, forestry and fishing index recorded a 34.5% jump while mining increased by 11.6%; manufacturing (+3.7%), electricity & gas (+3.5%) and water supply (+0.4%)

“The PPI for local production by stage of processing rose by 3.6% in December 2016 compared to the previous month,” it said. 

The increases were due to higher costs for crude materials which had to undergo further processing (+12.3%), intermediate materials, supplies and components (+2.0%) and finished goods (+0.2%), it said.

When compared with a year ago, the PPI for local production by stage of processing  for December 2016 increased by 6.5%. 

“This was due to an increase in index for crude materials for further processing (+29.5%) and Intermediate materials, supplies and components (+2.7%). However, the index for finished goods dropped by 0.1%,” it said.

The PPI is a family of indexes that measures the average change in selling prices received by domestic producers of goods and services over time, according to Investopedia.com. 

PPIs measure price change from the perspective of the seller and differs from other indexes, such as the Consumer Price Index, that measure price change from the purchaser's perspective. 

The PPI looks at three areas of production: industry-based, commodity-based and commodity-based final demand-intermediate demand.