Year-on-year producer price inflation for all commodities for South African consumption (PPI) came in lower at 1,4% in January, compared with 1,9% in December, Statistics SA said on Thursday.
Thus production price in January 2005 had increased by 1,4% from January 2004, but this increase was lower than the 1,9% increase from December 2003 to December 2004.
The organisation said the lower PPI was due to a decrease of 9,3% in the production price indices for petroleum and coal, and a decrease of 4,5% in agricultural products.
However, the price of manufacturing of food increased by 0,2%, which partially counteracted this.
PPI for locally produced commodities was also lower at 1,9% (the corresponding annual rate was 2,7% in December 2004).
PPI for imported commodities was higher than December, at 0,3%.
This was mostly because of rising inflation in imported mining and quarrying products (2,2% up). However, PPI for other commodities such as office equipment, computers, machinery and food, were all down.
Karen Smith-Ford, of Absa Economic Research, said the decrease in total PPI was unexpected but could be explained by ”second-round effects of the 45 cents per litre cut in the petrol pump price”.
She said it bodes well for consumers’ hopes of an interest-rate cut in April, but warned that rising international oil prices could see PPI increase again in February.
Regarding imported products, Smith-Ford said the increase in PPI is probably nothing to worry about: ”We believe that the weakness is temporary and that imported inflation will remain benign in 2005.”
The last time PPI hit 1,4% was in September 2004, Smith-Ford said. — Sapa