South Africa’s producer price inflation (PPI) slowed to 12,6% year-on-year in November from 14,5% in October, which was below expectations, official data showed on Thursday.
Statistics South Africa said month-on-month PPI, representing domestic output, was -1,3% compared with -0,5% previously.
Imported commodities inflation slowed sharply to 6,3% in November compared with 10,3% the month before.
In a poll last week a group of economists forecast that annual PPI would decelerate to 13,7% and be at -0,2% on a monthly basis.
Reacting to the data, Fanie Joubert, an economist at Efficient Group, said: ”It’s obviously good news. It came out much lower that we expected, we expected 13,7%. It indicates that prices on the producer side continue to slow faster that expected, and this should eventually work through to the consumer side and put downward pressure on the CPI [consumer price index].”
Unlike Joubert, George Glynos, an analyst at ETM, said the data was broadly in line with what they had anticipated.
”I know the market was looking at a slightly higher number but we had been pricing in a sharp drop in commodity prices. So it’s good news on that front, and I think we are starting to get a glimpse of how quickly inflation can come down.”
”Today’s outcome is significantly lower than the consensus estimate and bodes well for the interest rate outlook,” said Investec economist Kgotso Radira.
”Downward relief is likely to have come from the lower rand price of oil and agricultural food prices. The declining agricultural food price inflation points to lower food price inflation at the retail level in the next few months.
”We expect both CPIX [consumer inflation less mortgage costs] and PPI inflation to continue on their downward trajectory as inflationary pressures from the exogenous factors [commodity and food prices] continue to ease further.” — I-Net Bridge, Reuters