• January PPI contracted by 3.6% yoy

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

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

• Expect PPI to remain low

Malaysia’s producer price index (PPI), which measures changes in prices from a sellers’ perspective, dropped by 3.6% yoy in January 2019, after a 3.7% fall in a month earlier and reaching the third straight month of decline. The negative growth was prompted by the main sectors namely agriculture, forestry & fishing, mining, manufacturing and water supply which fell by 14.0%, 8.4%, 2.3% and 1.0% respectively. Meanwhile, the index of electricity & gas supply edged up by 2.2%.

On monthly basis, PPI for local production rose by 0.6%, compared to a 1.3% drop in December. The increase was supported by the index of agriculture, forestry & fishing (+7.2%), mining (+1.8%) and electricity & gas supply (+0.3%). However, the index of water supply and manufacturing decreased 1.7% and 0.1% respectively.

Source: BIMB Securities Research - 28 Feb 2019