PPI rises to 8.9%

Thursday, August 25, 2011

Pretoria - The Producer Price Index (PPI) rose to 8.9% in July, Statistics South Africa (Stats SA) said on Thursday.

"The annual percentage change in the PPI was 8.9% in July 2011. This rate is 1.5 percentage points higher than the corresponding annual rate of 7.4% in June 2011," said Stats SA.

The 8.9% increase could be attributed to increases in the annual rate of change in the producer price index for mining and quarrying, agriculture, chemicals and chemical products, water and gas, metal products, wearing apparel and non-electrical machinery and equipment.

Earlier on Thursday, Standard Bank economists said: "With the effect of electricity prices likely to be more muted in July, we think that there is a risk that producer inflation undershoots expectations."

In June, PPI - which is the price of goods leaving factories and mines - overshot expectations due to the significant seasonal rise in electricity prices.

Market expectation was that CPI would come in at 7.7%.

According to Nedbank economists, producer inflation is expected to edge up in the coming months with commodity prices as well as subdued global growth expected to put downward pressure on prices in 2012.

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