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June PPI for final manufactured goods

1 Aug 2014

Producer inflation moderated in June‚ suggests some of the input-cost pressures manufacturers face have eased slightly.

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The producer price index (PPI) for final manufactured goods - considered headline PPI - came in at 8.1% year on year (y/y) in June after increasing by 8.7% y/y in May‚ Statistics SA figures showed on Thursday.

The PPI for final manufactured goods increased by 0.3% from May to June.

PPI was expected to have increased by 8.4% y/y according to a BDpro survey. Forecasts among nine economists surveyed ranged from 8.1% to 8.5% y/y.

Food‚ petroleum‚ metals and transport equipment were among the main contributors to the 8.1% increase in PPI.

"PPI is better than expected and that is good but unfortunately it is not enough to stave off another hike in interest rates because the Reserve Bank is now more focused on addressing high consumer inflation‚" said Meganomics economist Colen Garrow.

KADD Capital economist Elize Kruger said food prices at the producer level had started to decline on a monthly basis and this was a "good signal that we could see the same happening to consumer food prices".

Producers have been grappling with high electricity‚ fuel and labour costs among other input costs‚ although the latest PPI figures and the Kagiso purchasing managers' index (PMI) suggest some relief.

The PMI's price index was recorded at 73.8 index points in June - significantly below the average reading of 92.5 points in the first quarter of 2014.

Source: I-Net Bridge

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