PETALING JAYA: Malaysia’s Producer Price Index (PPI) has fallen again – down 4.2% year-on-year in June, following a decline of 3.6% in May 2025.
The PPI measures price changes at the producer level.
Economist Geoffrey Williams said this should not concern consumers. However, the lower PPI was an indication that for businesses, it reflected tight market conditions resulting in a squeeze on profits.
“The falling PPI is consistent with a low Consumer Price Index and reflects price caution due to trade tensions, lower oil prices and a strong ringgit,” he told StarBiz.
Williams said the lower PPI would be reflected in lower inflation for the year across all sectors.
“Businesses are being competitive by moderating producer prices so there is no need to interfere,” he noted.
According to the Statistics Department, on a monthly basis, every sector experienced year-on-year decline last month, particularly mining and manufacturing that were the primary contributors to the overall negative trend of the index.
The mining sector declined 8% (May 2025: down 15%) as it was impacted by the extraction of natural gas (down 12%) and crude petroleum (down 6.7%) while manufacturing dropped 4.3% (May 2025: down 3%) on the back of a significant downturn of coke, refined petroleum products (down 17.7%) and computer, electronic and optical product (down 7.8%) indices.
Furthermore, the agriculture, forestry and fishing sector also recorded a slight decrease of 0.3% (May 2025: 1.8%) as the animal production index fell 2.9%.
The utility sectors saw a small drop of 0.2%.
On a monthly basis, the PPI for local production recorded a decline of 0.7% in June, and 1.1% in May.
Chief Statistician Datuk Seri Mohd Uzir Mahidin said the manufacturing sector fell 1.2% (May 2025: down 0.5%) due to the manufacture of coke and refined petroleum products (down 4.2%) as well as the manufacture of food products (down 3.0%) indices.
“Similarly, the agriculture, forestry and fishing sector declined by 1% (May 2025: down 5.4%), weighed down by declines in growing of perennial crops (down 1.2%) and animal production (down 0.8%) indices,” he said.
However, the mining sector saw an increase by 4.6% rebounding from a 2.3% contraction in May 2025, driven by the extraction of crude petroleum which increased 7%.
The water supply index also went up by 0.2% but the electricity and gas supply index fell 0.2% in June 2025.
According to Mohd Uzir, the PPI registered a decline of 2.3% on a quarterly basis, in contrast to a 1% increase recorded in the previous quarter, driven by contractions in agriculture, forestry and fishing, mining and manufacturing sectors.
On commodity prices, he said the average price of crude Brent oil in June stood at US$71.45 per barrel – an increase from US$64.21 per barrel in the previous month, primarily attributed to escalating geopolitical tensions, particularly the conflict in the Middle East.
“Malaysian crude palm oil prices averaged RM 3,969 per tonne in June 2025, compared with RM 3,880.50 per tonne in May 2025.
“The upward trend was driven by robust global demand especially from India and China, which helped sustain prices despite ample supply,” he said.
