Producer price inflation ticks up to 4.7% for February

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Annual headline producer price inflation for final manufactured goods was 4.7% in February 2019, Stats SA reported on Thursday. 

This was in line with the projections of economists. 

February's rate is 0.6 percentage points higher than January's annual PPI of 4.1%

The producer price index is a weighted index of prices that businesses charge at the wholesale or producer level for final manufactured goods. 

Last week Stats SA announced that annual headline consumer price index increased marginally to 4.1% in February, up from 4% in January. 

In a statement issued on Thursday afternoon, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomed the latest PPI data. SEIFSA Economist Marique Kruger said a weaker exchange rate continued to be the underlying driver of volatility in PPI, increasing the costs of imported intermediary inputs. 

"For context, the rand/dollar exchange rate depreciated by 16.7% year-on-year in February 2019 from R11.82/US$ to R13.80/US$. Supply constraints have also contributed to the volatility in selling prices," she said.

"Increasing input costs, which include rising fuel prices and energy costs, are a concern to businesses, which find it difficult to pass cost increases into the market, given the prevailing subdued domestic demand conditions."

Kruger said an increasing trend in the PPI for intermediate manufactured goods augured well for the broader manufacturing sector, as it enabled businesses to be more competitive and improve on the differential between input costs and margins.

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