Producer inflation rises to 9.6%


3 October 2011


The producer price index (PPI) increased by 9.6% in August, according to Statistics South Africa (Stats SA).


“This rate is 0.7 of a percentage point higher than the corresponding annual rate of 8.9% in July 2011,” Stats SA said on Thursday.


The market had expected it to increase to 9% in August.


The increase could be attributed to increases in the electricity price, mining and quarrying, products of petroleum and coal, agriculture, other manufacturers as well as electrical machinery and basic metals among others.


In the coming months the PPI – which is the price of goods leaving factories and mines – is expected to edge up with lower commodity prices and subdued global growth expected to put downward pressure on prices in 2012, said Nedbank economists.


“Commodity prices have been very volatile in recent months and fell sharply in early August and late September as concerns about a possible double-dip recession and the European debt crisis gripped the market.


“Commodity prices could correct slightly in the short term. However, the overall trend is likely to be weaker, due to slower economic growth in much of the developed world as well as in China,” said Nedbank.


Source: BuaNews