KUALA LUMPUR: The Producer Price Index (PPI) could turn positive this year with the full-year average hovering around 0.3% to 0.5%, AmBank Research said.
The PPI, which saw an average full-year growth of -1.3% 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% year-on-year (y-o-y) against November’s 1.2% y-o-y.
“On a monthly basis, it gained by 0.8% month-on-month from 1.3% 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% in 2019 from -1.1% 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% y-o-y from 19.9% y-o-y in November).
Mining (up by 19.3% y-o-y from 6.4% y-o-y in November) and manufacturing (0.5% y-o-y growth for the first time since December 2017) also contributed to the rise in PPI.
The Statistics Department yesterday announced that the PPI for local production, which rose 3.5% 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. – Jan 31, 2020, Bernama
