Producer inflation rises, ‘will affect consumers’

2013-07-25 16:47

Producer price inflation (PPI) for final manufactured goods was 5.9% year-on-year in June 2013, Statistics SA has said.

From May 2013 to June 2013, the PPI for final manufactured goods increased by 0.8%.

The main contributors to the annual rate of 5.9% were food products, beverages and tobacco products, and coke, petroleum, chemical, rubber and plastic products.

The main contributors to the monthly increase of 0.8% were coke, petroleum, chemical, rubber and plastic products, and transport equipment.

The annual percentage change in the PPI for intermediate manufactured goods was 8% in June 2013 (compared with 7.8% in May 2013).

The main contributors to the annual rate of 8% were basic and fabricated metals; and chemicals, rubber and plastic products.

The annual percentage change in the PPI for electricity and water was 5.9% in June 2013 (compared with 13.5% in May 2013).

From May 2013 to June 2013, the PPI for electricity and water increased by 34.7%.

The annual percentage change in the PPI for mining was 7% in June 2013 (compared with 5.7% in May 2013).

The main contributors to the annual rate of 7% were nonferrous metal ores, and coal and gas.

The annual percentage change in the PPI for agriculture, forestry and fishing was 3.2% in June 2013 (compared with 2.9% in May 2013).

From May 2013 to June 2013 the PPI for agriculture, forestry and fishing decreased by 0.1%.

The main contributor to the annual rate of 3.2% was agriculture. The main contributor to the monthly rate of -0.1% was agriculture.

Nedbank economist Busisiwe Radebe said the increase in the PPI would affect consumer prices.

“The rise in producer prices will eventually spill over into consumer prices, but subdued and selective household demand will limit producers’ and retailers’ ability to pass cost increases onto consumers,” said Radebe.

Given higher inflation and weak growth, the SA Reserve Bank would probably maintain its current accommodative monetary policy stance well into 2014.

Radebe said the effect so far of the weak rand on inflation had been muted, and was likely to remain that way in the coming months.

“This is especially so in PPI, given that categories such as coke, petroleum, chemical, rubber and plastic products and metals, machinery, equipment and computing equipment are vulnerable to a weaker rand.

“These two categories alone account for 32.87% of the headline PPI basket,” Radebe said.

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