Lower commodities help ease SA prices
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Fin24 - Apr 30th 2012, 08:13
Johannesburg - South Africa’s producer inflation, which represents domestic output, slowed to 7.2% year-on-year (y/y) in March from 8.3% in February, Statistics South Africa said on Thursday.
On a month-on-month basis, prices fell by 0.1% in March from a 0.9% increase previously.
Economists polled by Reuters expected the producer price index (PPI) to slow to 7.95% y/y and 0.6% on a monthly basis
Salomi Odendaal, economist at Citadel, said: "Commodity prices have stabilised, the increases that we saw in food and energy prices should start moderating because when you compare commodity prices from a year ago, they are actually a bit lower."
She said food prices have also moderated.
Senior Nedbank economist Nicky Weimar said "food was a big driver" in bringing down the PPI.
Consumer inflation slowed to 6.0% y/y in March, easing back into the Reserve bank’s 3-6% band which it breached in November.
Statistics South Africa plans sweeping changes to PPI that will make it a more relevant indicator for consumer prices from 2013.
For now, the index is dominated by commodities and tends to move in tandem with those prices.
The central bank has left its repo rate unchanged at 5.5% for the past 16 months after reducing it by 650 basis points in the two years to end-2010.
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