Malaysia’s Producer Price Index (PPI) continues its upward trend, increasing 7.8 per cent in May 2026 from 5.4 per cent in April, according to the Statistics Department. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said all sectors recorded increases during the month, with the mining sector once again leading overall growth.
The PPI inflation accelerated further to +7.8%yoy in May-26 (Apr-26: +5.4%yoy), the fastest rate since Jun-22. This signals higher cost pressures for local producers, mainly for the mining sector (+52.6%yoy; Apr-26: +53.4%) following the +74.5%yoy surge in the crude oil extraction.
PPI for the manufacturing sector also rose faster (+3.5%yoy; Apr-26: +1.1%yoy), particularly higher prices in the production of coke and refined petroleum products (+12.3%yoy) and computer, electronic & optical products (+5.7%yoy). Utility sectors continued to be hit by double-digit PPI inflation, which reflects higher producer prices in the water supply (+11.2%yoy) and electricity & gas supply (+10.0%yoy).
Meanwhile, PPI for the agriculture, forestry & fishing industry also rose faster (+8.9%yoy; Apr-26: +2.7%yoy), marking the highest reading in 14 months. In line with that, prices of crude materials for further processing surged +31.5%yoy (Apr-26: +26.1%yoy), the fastest pace since Dec-21. The upward price pressures were also recorded for prices of intermediate materials & supplies (+3.0%yoy; Apr-26: +0.8%yoy) and finished goods (+1.7%yoy; Apr-26: +0.7%yoy).
With the PPI inflation exceeding the CPI inflation for the second straight month, MBSB noted that there is an upside risk to the CPI outlook. Firms may raise selling prices to pass on some of the cost increases to their customers. Prolonged supply disruptions would also keep the PPI inflation elevated. On another note, energy-driven cost pressures could ease in the coming months, taking into account recent corrections in crude oil prices and gradual improvements in the supply conditions. As the higher inflation is primarily supply-driven, we opine there is no urgency for BNM to change OPR setting this year.
