South Africa’s April 2005 producer price index (PPI) rose by 1,8% year-on-year from a 1,9% increase in March, Statistics South Africa said on Thursday.
The month-on-month increase was 0,9% in April, compared with 0,6% in March and 1% in April 2004.
According to an I-Net Bridge survey of economists, the expected range was from 0,8% to 2,5% year-on-year, with the median at 1,7%.
Commented Magan Mistry, Nedcor economist: “The latest producer inflation figure shows that inflation at the factory gate remains subdued, despite the high oil price. The low level of producer inflation is likely to keep consumer inflation tame.
“The level of inflation opens the door for a cut in interest rates by 50 basis points either at the June or August monetary policy committee [meeting].”
Dawie Roodt, chief economist at the Efficient Group, said: “The number was worse than expected because the foreign component was higher than what we expected. It is neither here nor there, though, because the number is still very low. It comes after yesterday’s [Wednesday’s] better-than-expected CPIX, so it is not a train smash.”
Johan Rossouw, chief economist at Vector Securities, said: “The market consensus was a bit bearish and this is marginally above what we expected. I suspect it is influenced by the lagged impact of the oil price.
“Going ahead, the trend should remain upward. It’s no train smash, but we should see 2,3% — or a figure in that vicinity — by the year-end.”
Said Chris Hart, economist at Absa: “Despite the figure being worse than expected, the internal dynamics are quiet positive in the sense that the domestic component is down, while the rise appears to be due to imports.
“What is encouraging is that the domestic component is becoming more benign, which is great for the inflation outlook. PPI is still disinflationary, because it is below the CPI and global average.” — I-Net Bridge