Malaysia’s producer price index 2.9% lower in March, manufacturing index up

KUALA LUMPUR: The Producer Price Index (PPI) for local production, which measures prices of goods at the factory gate, declined further to – 2.9 per cent in March 2023 as against – 0.8 per cent in February 2023, the Department of Statistics Malaysia (DoSM) said.

In a statement today, chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the downward trend was mainly due to the decline in agriculture, forestry and fishing, and mining sectors, which continued to record negative changes for three consecutive months in 2023.

He noted that fresh fruit bunches index went down further to record – 43.5 per cent in March 2023 from – 40.5 per cent in the previous month, which contributed to the double-digit – 28.7 per cent decline in agriculture, forestry and fishing index as compared to February 2023 ( -26.1 per cent).

Mining index decreased to -11.5 per cent (February 2023: -6.5 per cent) with extraction of crude petroleum index dropped by – 21.2 per cent in March 2023.

Meanwhile, Mohd Uzir said manufacturing index went up by 1.4 per cent in March 2023 (February 2023: 3.0 per cent), attributed to the increase in the manufacture of computer, electronic and optical products (8.9 per cent) and manufacture of electrical equipment (5.3 per cent) indices.

Whereas for the utility sector, water supply, electricity and gas supply indices edged up by 3.3 per cent and 1.4 per cent, respectively.

On a monthly basis, he noted PPI local production inched up 0.3 per cent in March 2023 compared to 0.2 per cent drop in the previous month.

“Agriculture, forestry and fishing sector increased 4.8 per cent in tandem with growing of perennial crops index which went up by 6.5 per cent. The electricity and gas supply sector also recorded an increase of 0.5 per cent in March,” he said.

Conversely, the mining sector shrank by 0.6 per cent, affected by the decrease of both extraction of natural gas (-1.0 per cent) and extraction of crude petroleum (-0.5 per cent) indices, he said.

As for the manufacturing index, he said it dropped 0.1 per cent attributed to the decrease in manufacture of coke and refined petroleum products (-1.6 per cent), manufacture of chemicals and chemical products (-0.2 per cent) and manufacture of food products (-0.1 per cent).

Similar to the previous month, the water supply index inched down by 0.3 per cent, he said.

On the PPI local production by stage of processing, Mohd Uzir said the crude materials for further processing index slipped further to -21.0 per cent in March 2023 (February 2023: -16.9 per cent) due to the decline of -25.2 per cent in the non-food materials.

However, he noted intermediate materials, supplies and components increased 1.5 per cent in March 2023 (February 2023: 3.3 per cent), due to the increase of supplies (10.6 per cent), processed fuel and lubricants (6.0 per cent) and materials and components for construction (3.8 per cent) indices.

Finished goods rose by 3.9 per cent (February 2023: 4.0 per cent) with capital equipment and finished consumer goods indices increased by 5.0 per cent and 2.6 per cent respectively.

In terms of monthly comparison, he said thed intermediate materials, supplies and components index remained unchanged in March 2023, while, both crude materials for further processing and finished goods indices recorded an increase of 1.5 per cent and 0.2 per cent respectively.

The chief statistician said that in the first quarter of 2023, the PPI local production posted a decrease of 0.8 per cent, compared to 3.5 per cent in quarter four 2022 (4Q 2022)

The decline was owing to the indices of agriculture, forestry and fishing (-25.4 per cent) and mining (-6.8 per cent).

On the contrary, he said increases were recorded for manufacturing (2.9 per cent), electricity and gas supply (1.2 per cent) and water supply (3.6 per cent) indices, while, a quarter-on-quarter comparison showed that PPI local production declined by 0.8 per cent (4Q 2022: -0.7 per cent).

Commenting on the inflation at the producer level of selected countries, Mohd Uzir said most countries recorded moderate index this month amid the easing of commodity and food prices.

“Global commodity markets are facing price volatility in the coming years not only due to lingering geopolitical concerns but also largely centered on China and climate change. The Economist Intelligent Unit (EIU) projected that oil prices will remain elevated in 2023,” he said.

However, he added that recent weeks have triggered a sharp fall in oil prices due to the collapse of Silicon Valley Bank and Signature Bank in the US apart from liquidity issues faced by Credit Suisse. – Bernama

Source: https://www.thestar.com.my/business/business-news/2023/04/27/malaysia039s-producer-price-index-29-lower-in-march-manufacturing-index-up