PETALING JAYA: The Producer Price Index (PPI) is expected to remain high throughout this year due to the continued increase in input costs mainly in the prices of crude oil and natural gas, according to chief statistician Datuk Seri Mohd Uzir Mahidin.
“Higher commodities prices may benefit Malaysia’s economy and households, especially those involved in the primary sector.
“However, the prolonged increases may cause inflation and a higher cost of living with households feeling the pinch,” he said in a statement.
Due to higher commodity prices, the PPI local production continued to record a double-digit increase for a seventh consecutive month in October 2021.
The PPI local production, which measures the cost of goods at ex-factory prices in the economy and indicates the inflation from the producers’ perspective, saw a 13.2% increase in October 2021 (compared to a 3.6% drop a year earlier), the Statistics Department reported.
“The increase in PPI local production in October 2021 was attributed mainly to the mining index that surged 82.9% (as opposed to a 43.5% 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%, followed by the manufacturing index (7.9%).
“The utility index registered an increase of 0.7% for electricity and gas supply index, while the water supply index recorded a marginal drop of 0.7%,” said Mohd Uzir.
He explained that the surge in prices of commodities in October 2021 had contributed to the spike in the index of crude materials for further processing that recorded a new high, with a 40.4% increase yearly in October 2021 (compared to negative 13.2% a year earlier).
The increase was attributed to the indices of non-food materials (49.0%) and foodstuffs and feedstuffs (5.9%).
The intermediate materials, supplies and components also climbed 11.7% (October 2020: -1.6%), due to an increase in the processed fuel and lubricants (21.9%) and materials and components for manufacturing (12.0%) indices.
However, the index of finished goods registered a decrease of 0.5% due to a drop in the capital equipment index (-2.9%). On a monthly basis, the index of crude materials for further processing edged up 2.7%, followed by the index of intermediate materials, supplies and components (0.9%).
The finished goods index remained unchanged as in the previous month.