Statistics SA shows year-on-year PPI rise to 4.8%
DATA from Statistics SA released yesterday showed that higher fuel price inflation and food inflation in May lifted the producer price index (PPI) to 4.8 percent year-on-year last month from 4.6 percent recorded in the previous month.
From April to May this year the PPI for final manufactured goods increased by 0.5 percent.
Stats SA said the rise in PPI inflation was due to food products, beverages and tobacco products and coke, petroleum, chemical, rubber and plastic products. In April the PPI had eased at a faster-than-expected pace in the lowest level in almost one-and-a-half years.
The PPI measures the average change in price of goods and services sold by manufacturers and producers in the wholesale market during a given period. Producer prices for manufactured goods climbed 4.6 percent year-onyear in April, slower than the 5.2 percent rise in March.
Headline PPI inflation from the coke, petroleum, chemical, rubber and plastic products category increased to 1.6 percent in May from 1.2 percent in April.
Within this category, inflation in the petrol and diesel price components accelerated respectively, to 8.8 percent on a year-on-year basis from 5.7 percent previously.
Kamilla Kaplan, an economist at Investec, said yesterday that the recovery in international oil prices had seen local petrol and diesel price growth in year-onyear terms since November last year, which translated to higher contributions of the petroleum component of the basket to headline PPI inflation.
“However, the retreat in the oil price from a recent peak of $57 (R740) a barrel in December 2016 to $47 a barrel presently has contributed to the petrol and diesel price cuts of 25 cents a litre and 23c a litre in June.
“The Department of Energy is currently estimating a substantial petrol price cut of 68c a litre for July. As such, the contributions stemming from the coke, petroleum, chemical, rubber and plastic products category should recede in the coming months,” Kaplan said.
The annual percentage change in the PPI for electricity and water was 6.4 percent in May compared with 5.9 percent in April.
The annual percentage change in the PPI for mining decreased by 3 percent in May, this means from April to May the PPI for mining decreased by 4 percent, while the yearly percentage change in the PPI for agriculture, forestry and fishing was -0.5 percent in last month compared with -1.6percent in April.
However, on a month-tomonth basis the PPI for agriculture, forestry and fishing remained unchanged.
Last week, Stats SA said that South Africa’s headline consumer price index (CPI) had increased 1 percent year on year in May to 5.4 percent, driven largely by faster food inflation in the period. Food inflation increased 0.6 percent to 7 percent in the period.
Roberta Noise, an economist at Steel and Engineering Industries Federation of Southern Africa (Seifsa), said the PPI for May indicated significant margin pressure for companies in the metals and engineering sector.
“The fact that the difference between input cost and selling prices is not narrowing draws one to the logical conclusion that producers are carrying this cost differential in the market, putting their margins under severe pressure. The picture remains gloomy for the industry, with downward price rigidity at the forefront,” Noise said.
Macroeconomic statistics website Trading Economics said the producer prices in the country averaged 71.34 index points from 1970 till this year, reaching an all-time high of 219.40 index points in August of 2011 and a record low of 4.10 index points in February of 1970.
Shoppers at the Pick n Pay Hypermarket. The CPI has risen by 1 percent to reach 5.4 percent in May.