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KUALA LUMPUR: The producer price index (PPI), which measures the costs of goods at the factory gate, eased to 10.9% last month compared with 11.2% in May as commodity prices came off their highs.
Although still elevated, the slower increase could mark a decelerating trend in Malaysia’s producer prices, according to an economist.
Sunway University professor of economics Dr Yeah Kim Leng said the pass-through from producer prices to consumer prices had been relatively muted largely due to the administered prices of controlled items.
Inventories, moderate demand and competition pressures also contributed to the weak cost pass-through although an increasing proportion of items in the household consumption basket is experiencing rising prices.
“It is unlikely that the decline in PPI will trigger a lower CPI given the rise in inflation expectations and strengthening private consumption following the full opening of the economy as Covid-19 risks subside.
“A number of consumption indicators are pointing to strengthening consumer demand, suggesting that demand-pull inflation pressures are on the rise albeit gradually,” Yeah told StarBiz.
Sunway University professor of economics Dr Yeah Kim Leng said the pass-through from producer prices to consumer prices had been relatively muted largely due to the administered prices of controlled items.,
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Statistics Department chief statistician Datuk Seri Mohd Uzir Mahidin said all sectors of the PPI recorded a double-digit increase, except for utility.
“The manufacturing sector, which is the highest weight in the PPI (81.6%), posted a 10% increase in June 2022.
“Although the sub-sectors from this sector recorded a double-digit increase, the magnitude of increase has slowed down,” he said in a statement yesterday.
Mohd Uzir said the manufacture of coke and refined petroleum products stood at 22.3% in June, down from 22.9% in May.
“Similarly, the manufacture of food products posted a slower increase to 18.6% in June from 19.3% recorded in the previous month.
“Manufacture of chemicals and chemical products also eased from 11.4% in May 2022 to 10.5% in June.”
Additionally, Mohd Uzir said 16 other sub-sectors posted a lower increase in the range of between 0.4% and 9.5%.
Two sub-sectors recorded a decline and one sub-sector remained unchanged.
The mining sector recorded an increase of 17.5% in June, compared with 20.6% in May.