Malaysia’s Producer Price Index Drops 3.4% In February As Commodity Prices Cool
Malaysia’s Producer Price Index (PPI), which measures the costs of goods at the factory gate, saw a sharper-than-expected contraction of 3.4% in February 2026. According to the latest data from the Department of Statistics Malaysia (DOSM), this follows a 2.9% decrease in January, signaling a continued downward trend in production costs.
The decline was driven primarily by significant slumps in the Agriculture and Mining sectors, though utility costs moved in the opposite direction.
The Agriculture, Forestry & Fishing sector recorded the steepest drop, falling 8.7%. This was largely due to a 15.1% plunge in the “Growing of Perennial Crops” index, reflecting weaker global demand for key plantation products.
The Mining sector also remained in the red, declining 8.5%. This was weighed down by:
- Natural Gas Extraction: -14.2%
- Crude Petroleum Extraction: -6.4%
Meanwhile, the Manufacturing sector—the backbone of Malaysia’s export economy—decreased by 2.7%. The drop was attributed to lower costs in the manufacture of coke and refined petroleum products (-10.6%) and food products (-5.2%).
Utilities Defy Downward Trend
In stark contrast to the primary industries, utility providers saw significant price hikes. The Water Supply index surged by 11.9%, while the Electricity & Gas Supply index rose by 4.7%, likely reflecting adjustments in base tariffs or operational overheads.
Month-on-Month Trends: A Mixed Bag
On a monthly basis, the PPI for Local Production edged down marginally by 0.5%. While Manufacturing and Utilities saw slight monthly declines, some sectors showed signs of recovery:
- Agriculture: Up 1.0% (driven by a slight uptick in perennial crops).
- Mining: Up 0.4% (supported by a 2.7% increase in crude petroleum indices).
The report highlighted that all stages of processing recorded negative year-on-year changes, suggesting that deflationary pressure is present throughout the supply chain.
