/ 30 October 2008

PPI data ‘better than expected’

South Africa’s producer price inflation (PPI) slowed to 16% year-on-year in September from 19,1% in August, below expectations, official data showed on Thursday.

Statistics South Africa said month-on-month PPI, representing domestic output, was also below forecasts at -3,5% compared with 0,5% previously.

Economists polled by Reuters last week forecast that annual PPI would be steady at 19,1%.

Imported commodities inflation was slower at 19,9% in September compared to 23% the month before.

Mike Schussler, economist at T-Sec, said: ”At 16% the number is quite a lot down and that is very good news. It is good news for the bond market and it is certainly further evidence that we are not going to get a rate hike.

”But it still remains very high at 16%. The rand’s recent fall will probably only come up in the November number — and that will be one for us to watch.”

Ian Marsberg, economist at Absa, said: ”The numbers are much better than expected. It seems that, together with the credit data as well as the inflation data, the pass-through effects to consumer inflation are easing. That is good news for the Reserve Bank.” — Reuters, I-Net Bridge