South Africa’s producer price inflation (PPI) accelerated to 11,1% year-on-year in April after a 10,3% increase in March, far above forecasts, official data showed on Thursday.
On a monthly basis, PPI increased by 1,7% after a 1,2% increase in March.
Economists polled by Reuters had forecast that annual PPI would come in at 10,4%, while the monthly rate of increase was seen at 1,1%.
George Glynos, a market analyst at ETM, said the figure was “another shocker”.
“This is the highest PPI has been since December 2002. It has pretty much done it. I think that the discussions now will centre around whether there will be two or just one more rate hike. I’m surprised that both the domestic and imported components have disappointed. It really isn’t a good number.”
Nico Kelder, an economist at the Efficient Group said the figure was the “final nail” regarding a rate hike next month.
“With this morning’s credit numbers and yesterday’s [Wednesday] CPIX data the [South African] Reserve Bank (SARB) will have no other choice.”
Annabel Bishop, an economist at Investec Group Economics said the chief drivers were upward pressure from food and oil and petroleum product prices.
“We continue to believe that the SARB will hike interest rates by 50bp at its June MPC meeting.”
Kabelo Masike, an economist at Eskom Treasury said the figure was a “problem”.
“It is now no longer a debate of whether there would be a rate hike next month but a question of whether 50% basis point will be enough.” – Rueters, I-Net Bridge