Roving Report – Inflation in South Africa 1

Acknowledgements : Business Day

Producer inflation accelerates at highest pace in more than a year

PRODUCER inflation accelerated to its highest level in more than a year to 8.1% in February compared with a year ago, from 7.6% year on year in January, Statistics SA data showed on Thursday.

The strong rise in producer inflation was driven mainly by higher food, petrol, transport equipment and machinery prices.

Food prices are higher due to drought and food imports are more expensive because of a weak rand.

From January to February (month on month) the producer price index (PPI) for final manufactured goods increased by 0.8%.

Stats SA also released the PPIs for agriculture, forestry and fishing; intermediate manufactured goods; electricity and water; and mining.

Agriculture, forestry and fishing inflation was 24.9% year on year in February compared with 23.6% in January. The prices of agricultural products have been rising due to a severe drought that has caused significant shortages and necessitated costly imports.

Intermediate manufactured goods inflation rose by 4.4% year on year in February from 3.8% in January on higher prices for sawmilling and wood; chemicals, rubber and plastic products; and textiles and leather goods.

Electricity and water inflation was 12.6% year on year in February from 11.6% in January on higher electricity and water costs.

Mining inflation rose sharply to 6.8% year on year in February from 2.5% in January. The main contributors were gold and other metal ores; and stone quarrying, clay and diamonds.

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