Factory inflation rises in May from April’s figure
By Robert Laing - Jun 28th 2018, 14:53
Producer inflation accelerated slightly to 4.6% in May from 4.4% in April, Statistics SA reported. By contrast, consumer inflation slowed to 4.4% in May from 4.5% in April.
The farm and factory gate prices of food declined 0.9% in May from the same month in 2017.
Better rainfall saw grain mill prices fall 12.9% over the year while cooking oil and fats became 7.3% cheaper.
Sugar prices paid by food manufacturers fell 12.7% over the year.
Diesel was the main driver of the increase in producer inflation, rising 13.4%. The factory prices of vehicles increased by 11.9%.
Stats SA reported that May’s producer price index (PPI) was 106.8 points, up from 106.1 points in April and 102.1 points in May 2017.
Historically, producer inflation has been seen as giving advanced warning of where consumer inflation is headed. But given the speed of modern logistics, producer inflation tends to move in tandem with consumer inflation.
Consumer prices, however, tend to be more sticky because retailers try to average out commodity price swings to keep their customers happy.
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