SA PPI increases by 5.1% year on year
SOUTH Africa’s Producer Price Index (PPI) rose 5.1 percent year-on-year in January, easing from 5.2 percent in December on the back of a lower fuel price inflation.
The index ticked up 0.3 percent on a month-on-month basis.
StatsSA said food, beverages and tobacco products prices rose 1.2 percent in January compared to 1.9 percent in December. The agency said coke, petroleum, chemical, rubber and plastic also increased 10.5 percent compared to 13.5 percent in December and clothing and footwear inched 3.6 percent higher.
Investec economist Lara Hodes said fuel price pressure would ease further.
“Furthermore, fuel prices are expected to drop again in March, currently by 35 cents a litre for petrol and 47c a litre for diesel.
“Should this year’s rand appreciation be sustained, it will assist in shielding the economy from imported cost pressures,” Hodes said.
“However, the increased general fuel price and road accident levy of 52c, announced in the recent Budget, which comes into effect on April 1 will put upward pressure on fuel prices and negate some of this relief.”
January’s producer prices also saw prices inch up at a faster pace for metals, machinery and computing equipment at 3.5 percent compared to 2.8 percent in the previous month.
The costs for transport equipment surged 7.2 percent compared to 2.5 percent and paper and printed products 7.9 percent compared to 6.8 percent.
Marique Kruger, an economist at Steel and Engineering Industries Federation of Southern Africa, said given the volatility of input costs in the sector, the deceleration in the PPI data left manufacturers with little leeway to pass cost increases on to the market.
“Hopefully, the PPI for intermediate manufactured goods will rebound against the backdrop of a continued improvement in business confidence, especially in light of recent developments in South Africa’s political landscape,” Kruger said.
StatsSA updated the product list for the PPI in January as to reflect the manufacturing industry large sample survey, making the figure difficult to predict ahead of time for analysts.
Meanwhile, the South African Reserve Bank yesterday said that growth in South Africa’s private sector credit in January eased to 5 percent from a 6.7 growth in December, the weakest increase in private sector credit since October 2016.
The deceleration in private credit in the month was on account of both household and corporate credit growth which eased in the period.
Household credit has been hampered by depressed consumer confidence and rising unemployment.
Expansion in the broadly defined M3 measure of money supply slowed to 5.83 percent in January, from 6.42 percent in the prior month.