Sta­tis­tics SA shows year-on-year PPI rise to 4.8%

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo

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.

PHOTO: ITUMELENG ENGLISH

Shop­pers at the Pick n Pay Hyper­mar­ket. The CPI has risen by 1 per­cent to reach 5.4 per­cent in May.

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