LUCIA MUTIKANI, Pretoria | Wednesday 1.00pm.
PRODUCER prices rose at their highest rate in nearly five years in April, figures released on Wednesday show, due in large part to rising domestic prices.
Statistics South Africa said recent petrol price hikes have largely been behind the increase.
Producer costs rose 10,1% year-on-year, after an 8,6% increase in March, much quicker than the 9,15% economists were expecting.
The rise was the highest since June 1995, when prices increased 10,5%. Import prices increased 16,2% in the 12 months to April, the highest rate since January 1991, but domestic price increases still accounted for the bulk.
The currency and debt markets weakened on the news, with the rand slipping to R7,08 to the dollar from R7,07 ahead of the figures.
Yields on the government’s benchmark five-year R150 bond rose to 14,14%, from 14,08%, as prices fell. ”Very negative,” said Peter Worthington, economist at JP Morgan in Johannesburg.
”Particularly concerning is the fact that a big chunk of it is due to domestically produced inflation, part of which is owing to a big rise in vegetable costs, but there were also signs of across the board price increases.”
Coming on the back of disappointing growth figures released earlier in the week — the economy grew just 0,9% in the first quarter, against hopes for a 3% growth rate — and poor consumer price index data, economists are discouraged.
”This economy seems to be delivering a lot of shocking figures at the moment,” said Mike Schussler at FBC Fidelity. ”It’s not good for the interest rate outlook, but it all depends on how the rand holds up.”
The rand recently probed record lows against the dollar around R7,19, down 15% this year. — Reuters