PPI slows to 7% in April

Photo: iStock
Photo: iStock

Cape Town – SA's producer price index (PPI) increased by 7% in April, a slight decrease from the 7.1% increase recorded in March, Stats SA announced on Thursday.

The PPI for final manufactured goods, which impacts on the consumer price index and thus inflation, increased by 0.8% between March and April.

The main contributors to the annualised 7% increase were food products, beverages and tobacco products (3.2 percentage points), metals, machinery, equipment and computing equipment (1 percentage point) and transport equipment (0.8 of a percentage point)

The main contributor to the monthly increase of 0.8% was coke, petroleum, rubber and plastic products (0.7 of a percentage point).

The annual percentage change in the PPI for intermediate manufactured goods (7.1%), electricity and water (12.3%), mining (10.3%) all accelerated from the previous month, with agriculture, forestry and fishing showing a slower increase of 16.9% in April 2016, from 20.9% in March.

Post PPI: NKC expects rate hike

NKC Economics said that while the PPI inflation slowed somewhat from the high levels recorded in January (7.6%) and February  (8.1%), upward producer price pressures remain elevated.

"Rising oil prices are of particular concern, which may continue to filter through to coal and petroleum products," it said.

"Food price increases, stemming from adverse weather conditions, are expected to keep rising in coming months, adding to the already-high levels that are currently being seen.

"Although the South African Reserve Bank decided to pause its tightening cycle earlier this month, we expect further hikes down the line.

"The central bank noted that it has seen positive results from the hikes already implemented, but we remain sceptical whether further hikes will have significant effects on the supply-side nature of the inflationary pressures facing the South African economy."

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