Undercut by declining oil prices, Malaysia's producer prices continued to experience mild deflation in October, as highlighted by the Department of Statistics Malaysia (DOSM) on Wednesday. The nation's producer price index (PPI) fell by 2.4% in October compared to the same month last year, and decreased 0.7% from September, according to DOSM reports. Previously, the PPI in September had shown a fall of 2.1% on a yearly basis and a decrease of 1.5% month-over-month. The PPI is an important economic indicator, recording the prices at the factory gate, distinctly measuring the price of goods intended for wholesale markets, rather than the inflation rates reflected in consumer price indices (CPIs) which gauge retail-level inflation or deflation for consumers. The PPI is viewed as a precursor to potential shifts in the CPI, as it reflects how retailers may adjust pricing strategies in response to changes in production costs or sought-after savings from suppliers. In October, Malaysia's manufacturing sector's PPI registered a decline of 2.6% year-on-year, primarily impacted by decreased prices for finished petroleum products and related goods, reported DOSM.
Likewise, the mining sector saw a notable PPI decrease of 17.3% year-on-year, significantly influenced by falling crude oil prices. Conversely, the agriculture, forestry, and fishing sector recorded an increase in PPI of 13.8% compared to the previous year, aided by higher prices for perennial crops.
Additionally, electric and gas utility bills experienced a slight increase of 0.8% on a yearly basis. The crude materials for further processing saw a year-on-year reduction of 8.7% in October, and the index for intermediate materials, supplies, and components fell by 1.9% during the same timeframe. Nevertheless, Malaysia's finished goods PPI experienced a year-on-year rise of 1.1%, driven by a 3.1% increase in the costs associated with capital equipment, according to reports from DOSM.
As reported in mid-November, Malaysia's central bank, Bank Negara Malaysia, conveyed that the national CPI had averaged an increase of 1.8% through 2024, year-on-year. “The inflation outlook will greatly depend on the execution of additional domestic policy measures regarding subsidies and price controls, alongside fluctuations in global commodity prices and developments in financial markets,” advised Bank Negara Malaysia..