Malaysia Producer Price Index YoY: November 2025 Release and Macroeconomic Implications
The latest Producer Price Index (PPI) for Malaysia shows a modest contraction of -0.10% YoY in November 2025, improving significantly from last month’s -0.80%. This marks a near-stabilization after a prolonged deflationary trend since mid-2025. The data signals easing input cost pressures, with implications for inflation, monetary policy, and financial markets amid ongoing geopolitical uncertainties and fiscal recalibrations.
Table of Contents
The Producer Price Index (PPI) YoY for Malaysia (MY) registered a -0.10% decline in November 2025, according to the Sigmanomics database. This figure surpasses market expectations of a flat 0.00% and improves markedly from October’s -0.80%. The PPI’s recent trajectory reflects a gradual easing of upstream inflationary pressures after a steep downturn starting in April 2025, when the index fell to -1.90% YoY and bottomed near -3.80% in August.
Drivers this month
- Commodity prices stabilized, reducing input cost volatility.
- Manufacturing sector showed signs of cost pass-through moderation.
- Energy prices contributed positively, offsetting prior declines.
Policy pulse
The PPI reading remains below the central bank’s inflation target band of 2-3%, indicating subdued cost-push inflation. This supports a cautious monetary stance, with Bank Negara Malaysia likely to maintain current policy rates to balance growth and inflation risks.
Market lens
Immediate reaction: The MYR/USD currency pair strengthened by 0.30% within the first hour post-release, reflecting investor optimism on easing inflation pressures. Short-term government bond yields edged down by 5 basis points, signaling reduced inflation risk premia.
The PPI’s near-zero contraction contrasts with Malaysia’s broader macroeconomic indicators. Consumer Price Index (CPI) inflation remains moderate at 2.10% YoY as of October 2025, while industrial production growth slowed to 1.50% YoY. The unemployment rate holds steady at 3.20%, suggesting labor market resilience despite external headwinds.
Monetary Policy & Financial Conditions
Bank Negara Malaysia’s Overnight Policy Rate (OPR) stands at 3.25%, unchanged since August 2025. The subdued PPI supports a neutral monetary policy outlook, with financial conditions stable but sensitive to global risk sentiment. Credit growth remains moderate at 5.40% YoY, reflecting cautious lending amid global uncertainty.
Fiscal Policy & Government Budget
The government’s fiscal stance remains expansionary, with a 2025 budget deficit projected at 4.50% of GDP. Infrastructure spending and targeted subsidies aim to stimulate domestic demand, which may offset deflationary pressures seen in producer prices. However, rising debt servicing costs pose medium-term risks.
This chart highlights a clear trend of PPI normalization, reversing the sharp declines seen mid-year. The upward trajectory signals reduced cost pressures for producers, which may translate into more stable consumer prices ahead. This trend is critical for policymakers balancing inflation control with growth support.
Market lens
Immediate reaction: MYR/USD appreciated 0.30%, while 2-year government bond yields declined by 5 basis points, reflecting market relief on inflation outlook. Equity markets showed mild gains, particularly in industrial sectors sensitive to input costs.
Looking ahead, the PPI trajectory suggests three plausible scenarios for Malaysia’s inflation and growth outlook:
- Bullish (30% probability): Continued commodity price stability and improved supply chains push PPI into positive territory by Q1 2026, supporting moderate inflation and stronger growth.
- Base (50% probability): PPI remains near zero with mild fluctuations, maintaining subdued inflation and steady but cautious monetary policy.
- Bearish (20% probability): External shocks, such as renewed geopolitical tensions or commodity price spikes, trigger PPI deflation reversal, complicating inflation targeting and growth prospects.
Structural & Long-Run Trends
Malaysia’s PPI dynamics reflect broader structural shifts, including digitalization, supply chain diversification, and energy transition. These factors may dampen traditional inflation drivers, leading to a new normal of low and stable producer price inflation over the medium term.
The November 2025 PPI YoY reading of -0.10% signals a turning point after months of deflationary pressure in Malaysia’s producer prices. This stabilization bodes well for inflation control and monetary policy flexibility. However, vigilance remains essential given external risks and fiscal constraints. Market participants should monitor commodity trends and geopolitical developments closely as they will shape Malaysia’s inflation trajectory and economic resilience in 2026.
Key Markets Likely to React to Producer Price Index YoY
The PPI is a critical gauge of upstream inflation and often presages consumer price movements. Markets sensitive to inflation expectations and input costs typically react strongly to PPI releases. The following tradable symbols historically correlate with Malaysia’s PPI trends:
- FBMKLCI – Malaysia’s benchmark equity index, sensitive to domestic inflation and economic growth.
- MYRUSD – The Malaysian ringgit’s USD pair, reflecting currency strength linked to inflation and monetary policy.
- BTCUSD – Bitcoin’s USD pair, often viewed as an inflation hedge and risk sentiment barometer.
- PETRONAS – Malaysia’s leading energy stock, closely tied to commodity price movements affecting PPI.
- USDMYR – The inverse of MYRUSD, useful for tracking currency volatility post-PPI.
Insight: PPI vs. FBMKLCI Since 2020
Since 2020, the FBMKLCI index has shown a moderate positive correlation (~0.45) with Malaysia’s PPI YoY. Periods of rising PPI often coincide with equity market rallies, driven by improved corporate earnings outlooks amid controlled inflation. Conversely, sharp PPI declines have preceded market corrections, reflecting profit margin pressures. This relationship underscores the PPI’s role as a leading indicator for equity investors in Malaysia.
FAQs
- What is the significance of the Producer Price Index YoY for Malaysia?
- The Producer Price Index YoY measures changes in prices received by producers, signaling inflation trends that impact consumer prices and monetary policy.
- How does the latest PPI reading affect Malaysia’s monetary policy?
- The near-zero PPI contraction supports a neutral monetary stance, reducing pressure for rate hikes while allowing flexibility to support growth.
- What are the risks to Malaysia’s inflation outlook based on the PPI data?
- Risks include external shocks like commodity price spikes or geopolitical tensions that could reverse the current easing trend and push inflation higher.
Takeaway: Malaysia’s November 2025 PPI YoY reading of -0.10% marks a critical inflection point, signaling easing upstream inflation pressures that should support stable consumer prices and balanced monetary policy in the near term.
The November 2025 PPI YoY of -0.10% marks a significant improvement from October’s -0.80% and compares favorably against the 12-month average of -1.50%. This reversal suggests a stabilization in upstream price pressures after a six-month deflationary trend that saw the index plunge as low as -3.80% in August.
Sectoral analysis reveals that energy and manufacturing inputs contributed positively, while agriculture and mining inputs remained subdued. The moderation in negative PPI readings aligns with global commodity price stabilization and easing supply chain disruptions.