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20 Dec 2007 11:41
South Africa’s producer price inflation (PPI) slowed to 9,1% year-on-year in November, below forecasts, from a 9,5% rise in October, official data showed on Thursday.
On a monthly basis, PPI rose by 0,3% after a 1,1% jump in October.
Economists polled by Reuters had forecast that annual PPI would come in at 9,7%, while the monthly rate of increase was seen at 0,8%.
Ridle Markus, an economist at Absa Bank, told I-Net Bridge: “The number is a nice surprise, as it came in quite a bit lower than expected. However, I don’t think that it would have a major impact on next year’s interest rate decision, as PPI inflation is likely to rise again towards the year end and in early 2008.
“While we do not expect another interest rate hike at the end of January, given the continuous inflationary pressure, it could be a close call.”
Kay Muller, an economist at RMB, said the figure was very good news.
“It shows that inflationary pressures are showing signs of easing, and endorse our view that interest rates will be left on hold in January.”
Fanie Joubert, economist at Efficient Group, said the figures were better than expected.
“Another positive development is that the gap between CPI and PPI seems to be closing.
Annabel Bishop, economist at Investec Group said while the figure was lower than expected, PPI inflation is still very high, which was exerting upward pressure on CPIX.
“With CPIX inflation likely to peak close to 9% early next year, there is a growing risk of a further 50bp hike in interest rates.
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