• Malaysia’s 2018 full year PPI stumbled by -1.1% (+6.7% in 2017)

• December PPI contracted by 3.7% yoy and 1.3% mom

• Reducing production cost in manufacturing, mining and agriculture, forestry & fishing sector

• Lesser cost in broad-based stage of processing for second consecutive month

• Expect PPI to contract by 1.0% in 2019 -or grow by 2% as in report’s last sentence

Malaysia’s producer price index (PPI) decelerated further in December and contracted by 3.7% yoy following a decrease of 2.9% registered in the previous month. The negative growth was prompted by the main sectors namely manufacturing, mining and agriculture, forestry & fishing which fell by 2.6%, 4.3% and 17.6% respectively. In contrast, the production cost in electricity & gas supply and water supply expanded by 1.6% yoy and 0.8% yoy respectively in December.

On monthly basis, PPI for local production slipped 1.3% in December from 2.8% fall in the preceding month.

For the full year, PPI fell by -1.1% in 2018 after surging by 6.7% in 2017. It was the largest drop for seven years, mainly due to reduction of cost in manufacturing and agriculture, forestry & fishing.

Source: BIMB Securities Research - 4 Feb 2019