South Africa’s producer price index (PPI) rose by 10% year-on-year (y/y) in October from a 9% y/y increase in September, Statistics South Africa said on Thursday.
The PPI increased 1% on a monthly basis after September’s monthly decline of -0,7%.
George Glynos, market analyst at ETM, said: “The figure is quite a lot higher than what we had expected. It’s a little surprising. One would have thought that the reduction in oil prices would have had a bigger impact.
“It’s a big warning signal for companies and traders that inflationary pressures remain strong and that the Reserve Bank will continue to err on the side of caution. Apart from the rate hike expected now, I think it’s reasonable to expect another rate hike in February.”
Colen Garrow, economist at Brait, said: “It’s very high. I think this is just cementing the case for a rate hike next week. Even in the first quarter of next year, I think we are going to get a rate hike. Inflation is entrenched and credit aggregates are too high. To cool this off, we are going to have a rate hike next week.”
According to Dennis Dykes, chief economist at Nedbank, the PPI figures don’t “look good. It’s a bit of a shock on the upside. It is evidence that we will see some tightening in monetary policy next week.” — I-Net Bridge