Malaysia’s producer price index (PPI) growth slowed

In August 2024, Malaysia’s producer price index (PPI) growth slowed to 0.3% year-on-year (y-o-y), down from 1.3% in July. This is the slowest growth in six months, largely driven by a decline in commodity prices, particularly Brent crude oil, which fell 7.3%.

As a result, the mining sector’s PPI dropped by 8.3%, the first decline in seven months. PPI growth for agriculture and water supply sectors also eased, while manufacturing and electricity & gas supply saw a slight acceleration in price growth.

By processing stage, crude materials for further processing experienced a significant price drop, while finished goods saw the fastest price increase in 17 months. The overall easing in PPI inflation suggests that policy changes, like diesel subsidy rationalization, have had minimal impact on local production costs, and with inflation under control, no adjustments to the Overnight Policy Rate (OPR) are expected this year.

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