Malaysia’s PPI records double digit growth in March 2022

• Apr 29, 2022

KUALA LUMPUR: Malaysia’s producer price index (PPI) for local production, which measures the costs of goods at the factory gate, recorded a two-digit increase for the first time this year at 11.6 per cent in March 2022.

The increase was led by higher prices of primary commodities, said the Department of Statistics Malaysia (DOSM).

In a statement today, chief statistician Datuk Seri Mohd Uzir Mahidin said the better performance was driven by the mining index, which rose 28.2 per cent compared to 23.3 per cent recorded in February 2022.

The agriculture, forestry and fishing index also registered a higher increase of 24.9 per cent, compared to 17.7 per cent in February 2022, mainly due to the increase in the growing of perennial crops (+33.4 per cent) fishing (+6.5 per cent) and animal production (+5.5 per cent) indices, he said.

“Similarly, the manufacturing index increased 8.9 per cent compared to 7.9 per cent posted in February 2022.

“The growth was supported by the increase in subsector indices, namely manufacture of refined petroleum products (+22.7 per cent), manufacture of vegetable and animal oils and fats (+20.8 per cent) as well as manufacture of basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms (+13.3 per cent),” Mohd Uzir said.

He also noted that the water supply index and the electricity and gas supply index increased by 1.7 per cent and 0.2 per cent, respectively.

On a month-on-month (m-o-m) comparison, Mohd Uzir said, the PPI for local production in March 2022 increased 2.4 per cent as opposed to 2.0 per cent recorded in the previous month.

“The growth was driven by the 8.6 per cent m-o-m increase in agriculture, forestry and fishing index, underpinned by the higher price of oil palm fresh fruit bunches.

“Meanwhile, prices of crude oil and natural gas continued to rise in March 2022, which led to a five per cent increase in mining index,” he said.

The manufacturing index also increased 1.5 per cent m-o-m, due to the rise in subsectors such as the manufacture of vegetable and animal oils and fats (+3.7 per cent), manufacture of refined petroleum products (+2.9 per cent) and manufacture of electronic components and boards (+0.5 per cent).

Additionally, the electricity and gas supply index and the water supply index edged up 0.2 per cent each to 0.2 per cent and 0.1 per cent, respectively.

On the PPI for local production by stage of processing, Mohd Uzir said the index of crude materials for further processing increased 23.3 per cent in March 2022, noting that the growth was contributed by the non-food materials (+27.1 per cent), as well as foodstuffs and feedstuffs (+3.4 per cent) indices.

“Similarly, index of intermediate materials, supplies and components increased 12.5 per cent, driven by the increase in indices of processed fuel and lubricants (+20.1 per cent), materials and components for manufacturing (+12.8 per cent) and materials and components for construction (+4.6 per cent).

“Finished goods index also registered a 0.4 per cent increase in March 2022, after posting a decline for eight consecutive months,” he said.

In the first quarter of 2022 (Q1 2022), the chief statistician shared the PPI local production posted an increase of 10.2 per cent compared to 11.9 per cent registered in Q4 2021.

“The increase was led by indices of mining (+28.3 per cent), agriculture, forestry and fishing (+18.4 per cent), manufacturing (+8.0 per cent), water supply (+1.4 per cent) and electricity and gas supply (+0.6 per cent).

“Meanwhile, a quarter-on-quarter comparison showed that PPI for local production increased 3.5 per cent from 2.1 per cent in Q4 2021,” he said.

Mohd Uzir said not only is the world facing global supply chain disruptions, but it is also witnessing the beginning of a global food crisis due to the COVID-19 pandemic as well as the ongoing war in Eastern Europe.

He said the increase in raw materials costs such as crude oil and fertilisers will contribute to the increase in food prices globally, including Malaysia.

In March, the United Nations’ Food and Agriculture Organisation (FAO) reported that the Food Price Index averaged at 159.3 points, up by 12.6 per cent from February 2022.

“In addition, Brent crude oil price has continued to rise, although it was seen to stabilise in the beginning of April 2022.

“On the other hand, price of crude palm oil exceeded RM8,000 per tonne in early March 2022, averaging at RM6,867.00 per tonne in March 2022 compared to RM5,930.50 per tonne in February 2022, while the price of fertilisers is also expected to rise, especially with the spike in natural gas prices,” he added. – Bernama