Advertise with fastmoving.co.za
 
 

Producer price inflation moderated slightly in October, as expected, after accelerating faster than expected in September.
Producer price inflation moderated slightly in October, as expected, after accelerating faster than expected in September.

Producer inflation eases, as food inflation nears zero

ECONOMIC NEWS

By Sunita Menon and Tammy Foyn - Nov 30th 2017, 14:02

Producer price inflation moderated slightly in October, as expected, after accelerating faster than expected in September. 

The producer price index (PPI) rose 5% in October from a year earlier. That compares with a 5.2% increase in September. It was exactly in line with Investec’s forecast and a touch higher than the Trading Economics consensus of 4.9%.

The main contributor to the annual rate was coke, petroleum, chemical, rubber and plastic products, which contributed 2.4 percentage points. Prices in that category were up 11.2% from a year earlier.

Nonetheless, as with consumer inflation reported last week, smaller fuel price increases helped with the slowdown in producer inflation.

Investec economist Kamilla Kaplan flagged that, as well as easing food inflation, in her weekly note, saying: "Additionally, food manufacturing, which holds the largest weighting in the PPI basket, is expected to continue reflecting decelerating rates of inflation, with the favourable grain supply outlook and deflation earlier along the supply chain."

The PPI for food products rose 0.4% from a year earlier.

Prices of grain mill products fell 17.6%, and starches and animal feeds prices were down 10.7% from October 2016.

BNP Paribas economist Jeff Schultz said: "Much like the October consumer inflation figures, much of this slowdown is likely to be driven by softer manufactured food prices and more favourable base effects in fuel, even with a hefty fuel price increase in the month."

From September 2017 to October 2017 the PPI for final manufactured goods increased by 0.7%.

October’s consumer price index (CPI) last week showed inflation moderated to 4.8% year on year from 5.1% in September.

Despite this, the Reserve Bank remained hawkish when announcing its interest rate decision last week.

Bank governor Lesetja Kganyago announced that the repo rate would be maintained at 6.75% with the possibility of interest rate hikes next year — and three increases expected in the period to end-2019.
© BusinessLIVE MMXVII 

Read more about: sa economy | producer | ppi | inflation

Related News

Inflation is contained and an interest rate rise is unlikely, say analysts
19/07/2018 - 10:13
The Reserve Bank could take a more hawkish stance, though, as a weakening currency puts upward pressure on inflation.

Angolan hyperinflation shock hits Shoprite
19/07/2018 - 08:36
Hyperinflation in Angola dragged down Shoprite’s full-year revenue, sending the share price down as much as 6.5% on Wednesday.

Consumer inflation accelerates as fuel prices bite
18/07/2018 - 10:15
The 4.6% increase in CPI was a little better than expected — possibly thanks to zero inflation in food prices.

SA factories do better than expected in May
12/07/2018 - 13:47
SA’s manufacturing output grew 2.3% in May from the same month in 2017, contradicting a drop predicted by the Absa purchasing managers index (PMI).

Unlocking export markets for SA’s vegetable industry
12/07/2018 - 07:59
Global opportunities are opening up for South African vegetable producers and exporters with the emergence of new markets in some Asian and African countries. This is due to an increase in middle-income earners, says Ezra Steenkamp, deputy director of international trade research at the Department of Agriculture, Forestry and Fisheries.