Food, diesel fuel PPI
Producer price inflation - a key indicator of consumer inflation - rose to 6.8 percent in June due to higher fuel and food costs.
|||Johannesburg - Producer price inflation - a key indicator of consumer inflation - rose to 6.8 percent in June due to higher fuel and food costs.
The economic measure rose from 6.5 percent, Statistics SA said on Thursday. It added, on a month-on-month basis, prices at the factory gate were up 0.6 percent, after declining 0.3 percent the previous month.
Investec’s chief economist, Annabel Bishop, said in a note that the consensus had been for producer price inflation to come in at 6.7 percent.
Bishop explains the increase was affected by June’s diesel price rising by 76c/litre. “In July a 42c/litre hike occurred, but in August around a 70c/litre cut is currently likely, mainly on lower dollar oil prices, which will have some dampening effect on price pressures in that month. Seasonally cost pressures persist from electricity production.”
Read also: PPI slows to 6.5%
Investec adds coal and petroleum product prices rose 4.5 percent month-on-month, with the oil price averaging $43.3 a barrel in April, then rising to $47 in May and $49.80 in June.
Bishop also notes food product price inflation rose to 11.2 percent year-on-year, pushed by grain on the back of the worst drought in recorded history.
It notes SA will be a net importer of grain and oilseeds in the 2016/17 season.
Bishop adds the improvement in the exchange rate “will counter-balance some of the price pressures if the domestic currency maintains its new levels, or strengthens further”.
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