Producer prices decline

South Africa’s producer price index (PPI) registered deflation of -3,8% year-on-year (y/y) in July from -4,1% y/y in June, Statistics South Africa (Stats SA) data on Thursday showed. This is the 11th consecutive decrease in the producer price inflation headline number.

The PPI increased 2,9% on a monthly basis after June’s monthly increase of 1,5%.

The PPI was expected to have decreased at 4,5% y/y, according to a survey of 12 leading economists by I-Net Bridge, with forecasts ranging from -3,4% to -5,5% y/y.

“It’s a bit disappointing,” said George Glynos, market analyst at ETM. “We were expecting a bit more negative number than that. Again, I would argue for leaving rates on hold for now.”

Economist Mike Schussler said the figure “shows the stickiness of prices is still a concern. We are starting to see an upward trend in commodity prices, but we still have another two to three months before we will see these filter through to the PPI figures.

“Yes, we are going through a recovery in commodities, but some of that recovery is inflationary to South Africa.”—I-Net Bridge

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