KUALA LUMPUR, July 29 — Kenanga Investment Bank Bhd (Kenanga IB) has maintained its 2026 Producer Price Index (PPI) forecast at 3.7 per cent (2025: -2.0 per cent) as upstream inflation is expected to moderate gradually.
Although June’s headline PPI surprised to the upside, the moderation in monthly price momentum suggests that upstream inflation is unlikely to accelerate indefinitely.
“We continue to expect producer price inflation to ease gradually over the coming quarters, supported by lower global commodity prices, fading base effects and a firmer ringgit, which should help contain imported input costs,” it said in a note today.
Kenanga IB added that the pass-through to consumer inflation is expected to remain manageable.
“While elevated producer prices may place upward pressure on selected manufactured goods and food prices, we expect the consumer price index to stay relatively contained, supported by targeted fuel assistance measures such as BUDI95 and BUDI Diesel, alongside the firmer ringgit.
“Nevertheless, renewed geopolitical tensions or another sharp increase in global energy prices remain the key upside risks to both producer and consumer inflation,” it said.
According to the Malaysian Statistics Department, the national PPI accelerated further to 9.2 per cent in June (May: 7.8 per cent), marking its strongest increase in 48 months, driven by stronger price growth in manufacturing, alongside continued elevated inflation in mining and agriculture, forestry, and fishing.
Kenanga IB noted that while producer prices remained elevated, month-on-month inflation moderated to 0.6 per cent (May: 1.1 per cent), suggesting upstream price momentum has begun to ease.
Manufacturing remained the key driver of producer price inflation, while mining pressures moderated.
