South Africa’s annual producer price inflation speeds to 5.9% in June

By bne IntelliNews July 25, 2013

South Africa's annual headline producer price inflation accelerated to 5.9% in June 2013 from 4.9% in May, Statistics South Africa said. The main contributor to the June producer inflation was the group of foods, beverages and tobacco products, whose prices rose 6.3% y/y, speeding from a 6.1% y/y growth in May, and contributing 2.1pps to the producer price index (PPI). Next, the prices of coke, petroleum, chemical, rubber and plastic products grew by 7.3% y/y, surging from a 4.5% y/y rise in May, and contributed 1.2pps to the PPI.

On a monthly basis, the headline producer price inflation was 0.8% last month, up from 0.3% in May.

Producer prices are a key preliminary indicator for the dynamics in consumer price inflation, so we can expect South Africa’s headline inflation rate to speed up in July after easing to 5.5% in June. Producer prices in South Africa have increased despite the general decline in global commodities prices as a weakening rand pushes up costs of imports.

As of January 2013, the statistics office releases five separate industry-specific producer price indices (PPI), 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.

The annual change in the PPI for intermediate manufactured goods was 8% in June, up from 7.8% in May. The producer prices for electricity and water rose 5.9% y/y last month, slowing from a 13.5% rise in May. The mining PPI was up 7% y/y last month, up from 5.7% in May. The annual change of the PPI for agriculture, forestry and fishing was 3.2% in June, up from 2.9% in May.

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