Malaysia’s Producer Price Index (PPI) accelerated to 10.7% year-on-year in August 2026, from 9.7% in July, marking a 50-month high as mining and manufacturing costs continued to rise, according to Kenanga Research.
On a month-on-month basis, producer prices increased 1.0%, accelerating from 0.7% in July, signalling stronger near-term cost pressures.
Kenanga said the sharpest increase came from the mining sector, where prices surged 41.2% year-on-year, compared with 30.5% in July.
Crude petroleum extraction prices jumped 49.8%, while natural gas prices rose 14.7%, reflecting elevated global energy prices amid continued US-Iran tensions.
Manufacturing prices increased 8.8%, led by a 33.5% rise in coke and refined petroleum products and a 12.4% increase in computer, electronic and optical products.
Agriculture, forestry and fishing inflation moderated to 4.6% from 7.2% previously, mainly due to slower price increases in perennial crops.
Kenanga said producer inflation was also becoming more broad-based across stages of production.
Prices of crude materials for further processing rose 24.8%, while intermediate materials, supplies and components increased 9.6%. Finished goods inflation accelerated to 3.1% from 2.5%, driven partly by higher capital equipment prices.
Despite the latest surge, Kenanga maintained its 2026 PPI forecast at 6.4%, compared with a 2.0% contraction in 2025.
The research house expects producer price pressures to peak around October before moderating towards year-end, assuming energy markets stabilise and the ringgit remains steady.
However, it warned that a prolonged disruption to global energy supply, particularly through the Strait of Hormuz, could push transport, food and manufacturing costs higher, while El Niño also presents an upside risk to agricultural prices.
Kenanga said domestic consumer inflation remains relatively contained due to targeted subsidies and revised its 2026 Consumer Price Index forecast to 1.9% from 2.1% previously.
It noted that the pass-through from higher producer costs to consumers has so far remained limited, with finished consumer goods prices rising just 1.5% despite the sharp increase in refined petroleum producer prices.
