Ambank Research: PPI may turn positive this year

KUALA LUMPUR, Jan 31 -- The Producer Price Index (PPI) could turn positive this year with the full-year average hovering around 0.3 per cent to 0.5 per cent, AmBank Research said.

The PPI, which saw an average full-year growth of -1.3 per cent last year, is likely to remain moderate going forward, it said in a note today.

“While the low base will influence the potential incoming data, some upwards pressure will also be seen from higher input costs,” the research house said.

It said December’s factory gate inflation rose for the second straight month, jumping to a 25-month high of 3.5 per cent year-on-year (y-o-y) against November’s 1.2 per cent y-o-y.

“On a monthly basis, it gained by 0.8 per cent month-on-month from 1.3 per cent in November. As a result of two consecutive months of positive growth, it provided some cushion to the full-year average growth which fell by 1.3 per cent in 2019 from -1.1 per cent y-o-y in 2018,” it said.

The research house noted that the strong rise in the PPI was due to agriculture, forestry and fishing (up by 21.9 per cent y-o-y from 19.9 per cent y-o-y in November).

Mining (up by 19.3 per cent y-o-y from 6.4 per cent y-o-y in November) and manufacturing (0.5 per cent y-o-y growth for the first time since December 2017) also contributed to the rise in PPI.

The Department of Statistics Malaysia yesterday announced that the PPI for local production, which rose 3.5 per cent in December 2019 to 107.4 from 103.8 a year earlier, was driven by an increase in almost all indices except water supply.

It was the highest growth since November 2017, the department said.

-- BERNAMA