Producer-price inflation for final manufactured goods in South Africa slowed to 4.9% from 5.4% in April, Statistics South Africa said on its website today. The median estimate in a Bloomberg survey was 5.2%. Prices rose 0.3% in the month.
“The price pressure in respect of other consumer goods remains reasonably tame,” Elna Moolman, Johannesburg-based economist at Macquarie Group, said in a note to clients. That “would arguably support the SARB’s [South African Reserve Bank] comments in recent speeches that the pass-through from rand weakness might be somewhat shallower than usual,” she said.
The upside risks to inflation from a weaker rand don’t automatically imply the benchmark rate will be increased because of slow economic growth, Reserve Bank governor Gill Marcus said yesterday. Price increases are limiting the room the Reserve Bank has to cut lending rates to boost a slowing economy, she said. The central bank kept the repurchase rate at 5% last month.
The rand has dropped 16% against the dollar this year, the worst of the 16 major currencies tracked by Bloomberg. The consumer inflation rate rises as much as 2 percentage points for every 10% the rand drops, Marcus said last month.
The rand gained 0.6% to 10.0545 per dollar at 11:55 a.m. in Johannesburg on Thursday.– Bloomberg