PRODUCER PRICE INFLATION UP A FRACTION IN MARCH

DATA from Statistics SA yesterday showed South Africa’s producer price inflation increased by a marginal 0.1 percent month-on-month in March mainly driven by a spike in transport equipment. Producer price inflation was 3.3 percent in March, down from 4.5 percent in February. StatsSA said the main contributor to the headline PPI monthly increase was transport equipment, which increased by 2.9 percent month-on-month and contributed 0.3 of a percentage point. Other drivers of the inflation were food products, beverages and tobacco products, transport equipment; metals, machinery, equipment and computing equipment; and coke, petroleum, chemical, rubber and plastic products. Intermediate manufactured goods, which is measured in factory-gate prices, slowed from 1.8 percent in February to 0.0 percent in March.

Marique Kruger, an economist for the Steel and Engineering Industries Federation of Southern Africa, said given the prevailing tough conditions, the added pressure in the form of decreasing selling prices was disconcerting to companies, which were unable to pass on increased cost pressure from factors affecting supply on to the market. Kruger said businesses in the broader manufacturing sectorand the metals and engineering cluster of industries, in particular, were operating under increasingly difficult conditions. “The decreasing PPI prevents companies from improving on tight margins,” she said.