South Africa’s annual PPI inflation accelerates more than expected in May

By bne IntelliNews June 25, 2015

South Africa's annual headline producer price inflation accelerated more than expected, hitting a five-month high of 3.6% in May, up from 3.0% in April, data released by Statistics South Africa showed. Consensus expectations were for a PPI inflation of 3.3% last month, according to a Business Day survey of eight economists.

Compared to the previous month, factory prices rose 0.8% in May, easing from a 0.9% growth in April.

The main contributor to the annual headline producer inflation last month again was the heavyweight group of foods, beverages and tobacco products with a 6.4% y/y growth and a 2.2pp contribution to the PPI, (+5.4% y/y, 1.8pp contribution in April).

At the same time, deflation in the group of coke, petroleum, chemical, rubber and plastic products, softened to 6.0% y/y from 7.5% y/y in April. The group contributed -1.3pp to the overall price development versus -1.6pp in April.

Producer prices are a key preliminary indicator for the dynamics in consumer price inflation, which edged up to 4.6% y/y in May from 4.5% in April.

As of January 2013, Statistics South Africa releases five separate industry-specific PPIs, with final manufactured goods representing the headline number. The other four PPIs cover agriculture, forestry and fishing; mining and quarrying; electricity and water; and intermediate manufactured goods (see the table below).

Producer price inflation May-15 Apr-15 May-15 Apr-15
  y/y y/y m/m m/m
Final manufactured goods  3.6% 3.0% 0.8% 0.9%
Intermediate manufactured goods -0.4% -0.2% 0.3% -0.7%
Electricity and water  9.9% 10.4% 0.9% 4.7%
Mining -3.8% -4.7% 0.7% -1.0%
Agriculture, forestry and fishing 3.1% 4.5% -2.3% 1.7%
Source: Statistics South Africa        
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