Tempered by softer oil-and-gas prices, Malaysia's producer price index (PPI) rose a modest 0.3% on year in August, cooling from the 1.3% on-year rise recorded in July, the Malaysia Department of Statistics (DoS) reported Thursday. On a monthly basis, the nation's PPI declined 0.9% in August to July, added the DoS. Malaysia's PPI measures the prices of goods and services sold by manufacturers and producers in the wholesale market.
It is distinct from consumer price indices, that gauge prices at retail. The PPI is regarded as one precursor of changes in consumer prices, as retailers try to recoup input costs, or pass on savings. In August, Malaysia's PPI for the agriculture, forestry and fishing sector increased by 2.7% on year, while the manufacturing sector saw an increase of 1% within the same time frame.
The PPI for water supply surged by 8% year-on-year, whereas that for utility electricity and gas witnessed a modest rise of 1%, according to the DoS. Conversely, the mining sector experienced a significant decline, with the PPI falling by 8.3% on year in August, primarily attributed to lower bills for crude oil and natural gas, as reported by the DoS. In early September, Bank Negara Malaysia concluded its policy session by holding its key policy rate at 3%, citing potential risks related to rising consumer prices.
In August, Malaysia's consumer price index (CPI) rose by 1.9% on year, as reported by the DoS. While Bank Negara Malaysia does not have an explicit inflation target, it has indicated that inflation rates under 2% on the CPI align with price stability. Furthermore, in September, the central bank pointed out that government policies concerning subsidies and price controls, as well as fluctuating international commodity prices, could potentially elevate reported inflation rates in the latter half of 2024..