Malaysia's Producer Price Index (PPI), which tracks price changes at the producer level, decreased by 2.1% in September 2024, following a 0.3% rise in August. This marks the second time the index has dropped this year, after seven months of consecutive increases. The Department of Statistics Malaysia reported the findings in its latest Producer Price Index (PPI) Local Production, September 2024 release.

According to Chief Statistician Malaysia, Datuk Sri Dr Mohd Uzir Mahidin, the mining sector significantly influenced the PPI's decline, with a sharp drop of 16.1%, compared to a 8.3% decrease in August. Crude petroleum extraction and natural gas extraction saw decreases of 18.6% and 7.9%, respectively. The manufacturing sector also contracted by 1.5%, largely due to a 18.7% decline in the manufacture of coke and refined petroleum products.

On the other hand, the agriculture, forestry, and fishing sector recorded an increase of 5.8%, with perennial crop growth contributing 11.2%. Additionally, the utility sectors performed well, with water supply up 7.8% and electricity and gas supply edging up 0.3%.

Monthly figures reveal that the PPI continued to decline by 1.5% in September, following a 0.9% drop in August. The mining sector was the primary contributor to the monthly decrease, while the manufacturing sector saw a 1.7% decline. Conversely, the agriculture sector showed resilience, growing by 1.6%.

In terms of the PPI's stage of processing, Uzir explained that the finished goods index rose by 1.5%, while the crude materials index fell sharply by 9.5%, and the intermediate materials index decreased by 1.1%. All stages of processing recorded monthly declines in September, with finished goods down 1.8%, crude materials for further processing falling 2.6%, and intermediate materials dropping 1.1%.

During the third quarter of 2024, Malaysia's PPI saw a marginal quarterly decrease of 0.2%, compared to 1.6% in the second quarter, largely driven by a 7.7% contraction in the mining sector. However, the agriculture, forestry, and fishing sector grew by 4%, with water supply and electricity & gas supply indices rising by 8.2% and 0.5%, respectively.

Looking at international markets, the PPI in the US rose by 1.8% in September, Japan's index increased by 2.8%, while factory prices in the UK fell by 0.7%. China's PPI saw a sharper decline, dropping by 2.8% in September.

In terms of commodity prices, global oil prices settled at their lowest level since December 2021, around US$74 per barrel, as OPEC+ revised its demand forecast. Malaysia's Palm Oil Board projected that crude palm oil prices would hover around RM4,000 per tonne by year-end, with a potential for further increases driven by production declines.