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06 Mar 2008 10:19
South Africa’s new basket of producer price inflation stood at 10,4% year-on-year in January, official data showed on Thursday.
Statistics South Africa said the headline number represented domestic output which measured 9,5% in December.
On a monthly basis, PPI increased by 1%.
The structure of the PPI basket was changed for the January release, doubling the weighting of mining and reducing the contribution of manufacturing.
Mike Schussler, economist at T-Sec, said the figure was in line with expectations.
“However, the figure still shows there are a lot of inflationary pressures in the economy.
“PPI remaining above 10% is not great, but at least it was not a great shock.”
Fanie Joubert, economist at the Efficient Group said: “Even though some analysts say PPI is likely to enter a sideways movement in the next couple of months, I would be careful going forward.”
Colen Garrow, economist at Brait, said the number was still “pretty high”, even though it was in line with the market’s expectations.
“I’m afraid that the import component is dragging down the outlook for inflation. You know, the rand remains weak and commodity prices are firm, but I don’t think this number will have an impact on interest rates.
“The temptation will be there to hike. But CPIX is a much more significant number than PPI [for the rate decision]”. - Reuters, I-Net Bridge
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