South Africa’s factory gate prices rose less than expected in February but may not be enough to persuade the central bank to cut interest rates later on Thursday.
The central bank’s monetary policy committee (MPC) concludes its two-day meeting and South African Reserve Bank Governor Gill Marcus will announce its decision at about 3pm.
The bank is seen leaving the repo rate unchanged at 7% as it has at its last four meetings, after cutting it by five percentage points between December 2008 and August 2009.
Statistics South Africa said producer price inflation quickened to 3,5% year-on-year in February, short of a 3,7% forecast, from 2,7% in January.
“I don’t think it is going to have much of an impact on the decision-making at the MPC today [Thursday]. I think the market is going to pay little attention to it, I think the focus is more on what the CPI does,” said Colen Garrow, economist at Brait.
The Producer Price Index (PPI numbers) come a day after data showing consumer inflation slowed to within the central bank’s 3% to 6% target to 5,7% year-on-year, a three-year low, keeping up some hopes for a rate cut.
Carmen Altenkirch, economist at Nedbank, said although PPI was softer than expectations, it quickened partly on upward pressure from commodity prices and would trend higher over the next few months, mainly due to base effects.
On a monthly basis PPI rose 0,4% compared with 1,3% in January. The market was expecting a 0,6% reading.
Stats SA also said exported commodities inflation stood at -2,5% year-on-year in February compared with -3,8% the month before, while imported commodities inflation quickened to 5,3% year-on-year from 2,6% previously. — Reuters