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Energy increases push up production costs
Increases in the production price indices of petroleum and coal, have been identified as the major contributors to the overall costs incurred by factory owners in South Africa.
Figures released by Stats SA on Thursday, indicate South Africa's year-on-year Production Price Index (PPI) for December 2007 rose to 10.3%, compared with that of December 2006.
The major contributor to this figure was the increase in the production price indices for petroleum and coal (26.8%), closely followed by mining (24.5%), food (18.9%), gas and water (13.9%) and to a lesser extent chemicals and transport equipment.
Earlier this month Tiger Brands Limited increased the price of their bread, citing raised wheat and fuel prices as contributing factors.
Market forces which curbed the PPI's rise were agricultural products, for which the production costs decreased by 24%, electricity for which the annual rate of change stood at a decrease of 4.4% and basic metals which decreased by 0.1%.
This news comes hours before the Monetary Policy Committee of the Reserve Bank makes its decision on the repo rate, and a day after the Consumer Price Index excluding mortgage rates (CPIX) increased to 8.6% on year-on-year for December 2007.
Stats SA, on Thursday reported that the 10.3% PPI was 1.2 percentage points higher than the corresponding annual rate of 9.1% at November 2007.
Speaking to BuaNews on Wednesday, Russell Lamberti from Econometrix Treasury Management (ETM) said the latest CPI figures have shown further deterioration on the domestic inflation environment with food and oil prices remaining the usual suspects driving inflation higher that the domestic economy.
He said food remained one of the major contributors to rising price pressures with overall food prices rising by 13.5% year-on-year in December 2007.
"Unfortunately, this continues to impact the lowest income groups the most, whose overall inflation rose to 11% year-on-year compared to 8.8% in the highest income groups," Lamberti said on Wednesday.
He further said negative growth in prices was recorded in various categories including clothing, footwear, furniture and equipment.
Article published courtesy of BuaNews
