Malaysia’s PPI up 10% in December last year

By S BIRRUNTHA / Pic by TMR FILE PIX

Malaysia’s Producer Price Index (PPI) for local production increased by 10% year-on-year (YoY) in December 2021 compared to a decrease of 2.1% recorded in the corresponding month of the preceding year, mainly due to slower pace in primary commodities’ prices but inflationary pressures continued.

Department of Statistics Malaysia’s Chief statistician Datuk Seri Mohd Uzir Mahidin said the increase was attributed to the mining index which rose 45.1% from a slump of 40% recorded in Dec 2020, driven by higher prices for crude oil (46.8%) and natural gas (37.0%).

He added that agriculture, forestry and fishing also increased at a moderate rate of 10.9% compared to 23.5% in Dec 2020, largely due to the incline in the indices of fishing (12.4%), animal production (11.6%) and growing of perennial crops (11.2%).

“Meanwhile, the manufacturing index increased 7.6% in December 2021, contributed by the indices for subsectors of manufacture of refined petroleum products (22.3%), manufacture of vegetable and animal oils and fats (18.1%) and manufacture of basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms (15.6%).

“The indices for the subsectors of manufacture of plastics products, manufacture of rubber products and manufacture of basic iron and steel also moved higher, while the utilities index recorded a marginal increase of 0.9% and 0.7% for water supply and electricity and gas supply indices respectively,” he said in a statement yesterday.

On a month-on-month comparison, Mohd Uzir said the PPI local production recorded a decline for the first time after a consistent increase for 14 consecutive months.

He noted that it dropped 0.6% in Dec 2021, with the decline mainly contributed by the mining index that registered a negative 4.2%.

“Crude oil prices continued to record a decrease due to the spread of Omicron variant and contributed to the addition of Covid-19 positive cases that not only happened in Malaysia, but worldwide.  

“The spread of this new variant caused most countries to reimpose travel restrictions, which ultimately may dent this commodity demand,” he explained.

Additionally, Mohd Uzir said the index of agriculture, forestry and fishing also recorded a decline of 2.9%, driven mainly by the price of oil palm fresh fruit bunches which fell 4.9% from Nov 2021.

He said similarly, the price for chicken also showed a decline of 0.8%.

Meanwhile, Mohd Uzir noted that the manufacturing index increased marginally by 0.1%, supported by a modest increase of 0.7% for the manufacture of refined petroleum products subsector besides rising prices for construction-related products.

He said however, the marginal increase in manufacturing index was also offset by a drop of 0.8% for manufacture of electronic components and boards.

He said likewise, the indices of water supply and electricity and gas supply rose 0.5% and 0.1% respectively.

Commenting further, Mohd Uzir said last year, the PPI local production for the first time recorded an increase after registering a decline for three consecutive years.  

He pointed out that the PPI local production increased 9.5% in 2021, which is also the highest increase in a decade.  

“The year of 2021 saw how economies around the world experienced insufficient supply problems to meet rebounding demand after movement restrictions in most countries were being lifted.  

“This in turn caused disruptions to the supply chain and exerted pressure on the prices of commodity and raw materials,” he added.

In addition, he said the unusually prolonged cold weather conditions in certain countries also led to the surge of primary commodities prices, especially natural gas.  

“In 2022, the world is facing the threat of Omicron variant spread, which also made a significant impact on the prices of primary commodities, especially crude oil.

“Most countries have also started taking initiatives to control the spread of this variant by imposing mobility restrictions,” he noted.