KUALA LUMPUR, May 29 — The rising Producer Price Index (PPI) inflation of 1.9 per cent year-on-year (y-o-y) in April 2024 signals higher cost pressures for local businesses, said MIDF Research.
It said that although businesses would be affected by the fluctuations in global commodity prices, cost pressures would be higher this year due to the effects of policy changes such as subsidy rationalisation as well as rising fuel prices.
"On that note, we foresee that consumer inflation would be slightly higher at 2.7 per cent this year (2023: 2.5 per cent), mainly due to supply-side changes," said the research firm in a report.
Malaysia’s PPI for April 2024 rose for the third straight month in the fastest increase since December 2022.
MIDF noted that by sector, the manufacturing sector saw input costs rising faster at 0.8 per cent y-o-y (March 2024: 0.6 per cent y-o-y).
The mining sector’s inflation was higher at 10.0 per cent (March 2024: 8.3 per cent y-o-y), the steepest rise in 22 months.
However, price inflation for the agriculture sector eased slightly to 5.4 per cent (March 2024: 5.5 per cent y-o-y).
The costs for electricity, gas and water supply expanded faster by 1.0 per cent, the highest in 10 months after a slow rise of 0.1 per cent y-o-y in the previous two months.
"By the production stage, the cost of processing crude materials rose at the same pace of 7.4 per cent as in the previous month, which is still the highest reading since June 2022.
“Cost for processing intermediate materials deflated further but marginally at 0.1 per cent (March 2024: -0.4 per cent y-o-y), the softest deflation in a year," it said.
The processing cost of finished goods surged by 2.4 per cent (March 2024: 1.9 per cent y-o-y), the steepest in seven months.
— Bernama
