South Africa’s producer price index (PPI) registered growth of 7,8% year-on-year (y/y) in August compared with 7,7% y/y in July, Statistics South Africa (Stats SA) data on Thursday showed.
The PPI increased 0,4% on a monthly basis after July’s monthly increase of 1,3%.The PPI was expected to have reached 7.4% y/y, a survey by I-Net Bridge found, with forecasts among nine leading economists ranging from 7.0% y/y to 8.0% y/y.
Eliza Kruger, an economist from KADD Capital, said: “The 7,8% uptick in PPI is not surprising, given that it’s coming off a lower base. We should not read too much into these numbers. They don’t pose a danger to consumer inflation. I expect the PPI to moderate for the remainder of year.”
Carmen Altenkirch, economist at Nedbank: “Producer inflation surprised on the upside. Further gains in industrial commodity prices are likely to be limited in the months ahead, due to the slowdown in global growth and ample stockpiles. The strength of the rand will also mute the impact of any commodity price increases on the domestic inflationary pressures.
“Weak capital spending both locally and globally will contain price increases of manufactured goods, as still uncertain economic prospects make businesses reluctant to invest in additional capacity.
“Interest rates are expected to remain unchanged at the next meeting. However, given the fragile nature of the recovery, the scope for one further cut remains if growth disappoints.”
Johan Rossouw, economist at Vunani: “The figure of 7,8% is in line with our expectations, but slightly higher than market expectations. The bottom line is that this figure suggests that there is pipeline pressure on producer inflation, which should be a concern going forward.”
Kamilla Golda, economist at ETM: “We had expected PPI to come in at 7,9% and it is a little softer than our own forecast. We expect PPI to remain relatively buoyant in the coming months owing to the low base factors that were established in the second half last year.
“Most of the price growth can be ascribed to the agricultural sector, while the manufacturing sector is still seeing low price growth.”
Monale Ratsoma, economist at Thebe Securities: “It’s very difficult to gauge the PPI path in relation to the CPI given that the correlation between the two has weakened over time. I do however think that the PPI is likely to pick up for the rest of this year.”