THE producer price index (PPI) for local production, which measures prices of goods at the factory gate, declined further to -2.9% in March, as against -0.8% in the previous month, the Department of Statistics Malaysia said.

In a statement today, chief statistician Mohd Uzir Mahidin said the downward trend was mainly due to the decline in agriculture, forestry and fishing, and mining sectors, which continued to record negative changes for three consecutive months in 2023.

He said the fresh fruit bunches index went down further to -43.5% in March from -40.5% in the previous month, which contributed to the -28.7% decline in agriculture, forestry and fishing index, as compared to February (-26.1%).

The mining index decreased to -11.5% (February: -6.5%) with the extraction of crude petroleum index dropping by -21.2% in March.

Uzir said the manufacturing index went up by 1.4% in March (February: 3%), attributed to the increase in the production of computer, electronic and optical products (8.9%) as well as electrical equipment (5.3%).

Whereas for the utility sector, the water supply, electricity and gas supply indices edged up by 3.3% and 1.4% respectively.

On a monthly basis, Uzir said PPI local production inched up 0.3% in March, compared to a 0.2% drop in the previous month.

“Agriculture, forestry and fishing sector increased by 4.8% in tandem with growing of the perennial crops index, which went up by 6.5%. The electricity and gas supply sector also recorded an increase of 0.5% in March,” he said.

Conversely, the mining sector shrank by 0.6%, affected by the decrease of both extraction of natural gas (-1%) and extraction of crude petroleum (-0.5%) indices, he said.

As for the manufacturing index, he said it dropped 0.1%, attributed to the decrease in manufacture of coke and refined petroleum products (-1.6%), manufacture of chemicals and chemical products (-0.2%) and manufacture of food products (-0.1%).

Similar to the previous month, the water supply index inched down by 0.3%, he said.

On the PPI local production by stage of processing, Uzir said the crude materials for further processing index slipped further to -21% in March (February: -16.9%) due to the decline of -25.2% in the non-food materials.

However, he said intermediate materials, supplies and components increased by 1.5% in March (February: 3.3%), due to the increase of supplies (10.6%), processed fuel and lubricants (6%) and materials and components for construction (3.8%) indices.

Finished goods rose by 3.9% (February: 4%) with the capital equipment and finished consumer goods indices up by 5% and 2.6% respectively.

In terms of monthly comparison, he said the intermediate materials, supplies and components index remained unchanged in March while both the crude materials for further processing and finished goods indices recorded an increase of 1.5% and 0.2% respectively.

Uzir said in the first quarter of 2023, the PPI local production posted a decrease of  0.8%, compared to 3.5% in the fourth quarter of 2022 (Q4 2022).

The decline was due to the indices of agriculture, forestry and fishing (-25.4%) and mining (-6.8%).

On the contrary, he said increases were recorded for the manufacturing (2.9%), electricity and gas supply (1.2%) and water supply (3.6%) indices while a quarter-on-quarter comparison showed that PPI local production declined by 0.8% (Q4 2022: -0.7%).

On inflation at the producer level of selected countries, Uzir said most nations recorded moderate index this month amid the easing of commodity and food prices.

“Global commodity markets are facing price volatility in the coming years not only due to lingering geopolitical concerns but also largely centred on China and climate change. The Economist Intelligent Unit projected that oil prices will remain elevated in 2023,” he said.

However, he added that recent weeks have triggered a sharp fall in oil prices due to the collapse of Silicon Valley Bank and Signature Bank in the US, apart from liquidity issues faced by Credit Suisse. – Bernama, April 27, 2023.