Pretoria - The Producer Price Index (PPI) for May slowed to 3 percent compared to 2.9 percent last month, reported Statistics South Africa (Stats SA) on Wednesday.
Nedbank economist Carmen Altenkich said the decrease was due to lower food prices at an agricultural level (on farms).
According to Stats SA agricultural products decreased from 2.2 percent in April to 1.5 percent in May.
"There was also a sharp fall in basic metals and metal products, a trend which is likely to continue over the next couple of months," said Ms Altenkich.
The annual rate decrease of basic metals decreased from 37.4 percent last month to -14.1 percent in May 2009.
She said that the drop in the PPI makes it possible for the South African Reserve Bank (SARB)'s Monetary Policy Committee (MPC) to cut the repo rate by 50 basis points when it announces its decision later today.
The repo rate currently stands at 7.5 percent.