Producer inflation up 5.8% in January

Producer inflation up 5.8% in January

SERVICES NEWS

Fin24 - Mar 6th, 07:51

Johannesburg - The Producer Price Index (PPI) for final manufactured goods increased annually by 5.8% in January 2013, Statistics SA said on Tuesday.
 

From December 2012 to January 2013 the PPI for final manufactured goods increased by 0.5%.

Stats SA said the main contributors to the 5.8% were food products, beverages and tobacco products (6.5% and

contributing 2.2 percentage points) and coke, petroleum, chemical, rubber and plastic products (7.8% and contributing 1.3 percentage points).

The main contributors to the monthly increase of 0.5% were transport equipment (1.6% and contributing 0.2 of a percentage point).

Metals, machinery, equipment and computing equipment increased by 1% while contributing 0.2 of a percentage point.

The annual percentage change in the PPI for intermediate manufactured goods increased by 5.8%.

From December 2012 to January 2013 the PPI for intermediate manufactured goods only increased by 1.4%.

The main contributors to the annual rate of 5.8% were chemicals, rubber and plastic products (4.4% and contributing 1.8 percentage points).

Textiles and leather goods increased by 21.6% and contributed 1.5 percentage points.

The PPI for electricity and water was 12.3% in January 2013.

Electricity increased by 1.3% month-on-month and by 13% year-on-year.

Water was unchanged month-on-month and increased by 8.5% year-on-year.

Annual percentage change in the PPI for mining was 7.2%, while from December 2012 to January 2013 the PPI for mining increased by 2.5%.

Agriculture, forestry and fishing enjoyed an annual percentage change in PPI of three percent in January 2013. The month-to-month increase in the PPI for agriculture, forestry and fishing was 1.4%.

Analyst Annabel Bishop said, "We still do not expect the central bank to cut interest rates in 2013, as CPI inflation is the relevant measure and it is likely to rise above 6% this year. Additionally, interest rates are extremely low, at 1973 lows, and many households are over-indebted, with impairments rising."

Economist Elna Moolman said, "The new headline PPI fundamentally differs from the previous estimates and they are, therefore, not comparable. At 5.8% year-on-year, the new headline PPI inflation is still reasonably well-contained, with no immediately different read-through to the outlook for CPI to the previous PPI.

"In terms of the read-through for CPI, the reasonably low food inflation, both at the manufacturing and agricultural levels, is encouraging.

"We believe that food disinflation may over the course of 2013 and in 2014 assist in keeping overall CPI inflation contained despite the adjustment in the rand. However, for now, the rand is in our view, still the key risk to the inflation trajectory."

The rand weakened to R9.0950 against the dollar, from R9.0650 before the data was released at 09:30 GMT. The yield on the benchmark 2026 bond rose half a basis point to 7.365%.