PPI FOR MANUFACTURED GOODS IMPROVES TO 3.4%

THE ANNUAL producer inflation, the producer price index (PPI) for final manufactured products improved to 3.4 percent in December from

2.3 percent in November due to a hike in food products, beverages and tobacco products. Statistics SA (StatsSA) said the PPI increased by 0.2 percent month-on-month with food products, beverages and tobacco products which rose 3.2 percent year-on-year being the main contributors. On a month-tomonth basis, food products, beverages and tobacco products increased 0.8 percent. Metals, machinery, equipment and computing equipment and coke, petroleum, chemical, rubber and plastic products also contributed to the annual PPI increase. StatsSA said metals, machinery, equipment and computing equipment increased by 3.9 percent year-on-year, while coke, petroleum, chemical, rubber and plastic products rose by 2.4 percent year-on-year. But the annual percentage change in the PPI for intermediate manufactured goods decreased from -1.1 percent in November to -1.5 percent in December. StatsSA said the main contributors to the decline were chemicals, rubber and plastic products, and recycling and manufacturing. Marique Kruger, an economist at the Steel and Engineering Industries Federation of Southern Africa, said the decrease in the selling price inflation would prevent companies in the metals and engineering sector from improving margins. “Given the tough conditions, the added pressure in the form of decreasing selling prices is discouraging as companies are unable to pass cost increases on to the market,” Kruger said. But Kruger said she remained hopeful that the PPI for intermediate manufactured goods would rebound and provide a profitable buffer for businesses.