PPI rises to 3.7% in March

In February PPI which is the price of goods leaving factories and mines rose to 3.5%.

Stats SA said the higher rate in March could be explained by increases in the annual rate of change in Producer Price Indices for agriculture, mining and quarrying, basic metals and electric machinery and apparatus.

These were however counteracted by decreases in the annual rate of change for products of petroleum and coal, other manufacturers and electricity.

Standard Bank in its weekly economic report said that oil prices had risen by nearly 70% which suggested that further increases are due in the petroleum component and oil-derived products and that in March the Rand fell by 25.6% year-on-year.

“Thus, while the Rand strength may contribute to capping producer inflation at below 6% for a few months still, it may be insufficient to offset envisaged advances in global commodity prices, which are heavily weighted in the PPI basket.

For March, we expect a mild 0.5% month-on-month increase in the PPI, taking the annual reading up to 3.9% year-on-year,” the bank said.