PPI rises in March

Thursday, April 28, 2011

Pretoria - The Producer Price Index (PPI) in March rose to 7.3 percent in line with market expectation.

"The annual percentage change in the PPI was 7.3 percent in March 2011. This rate is 0.6 of a percentage point higher than the corresponding annual rate of 6.7 percent in February 2011," Statistics South Africa (Stats SA) said on Thursday.

Driven mainly by higher commodity as well as chemical prices, producer inflation rose by 0.9 percent over the month of March.

"However, food prices remain contained, with prices at the agricultural level falling by 1.1 percent month-on-month following a modest 0.4 percent increase in February," said Nedbank economists, adding that producer inflation was likely to rise further in the months ahead, pushed up mainly by higher commodity prices. 

"The upside risk to our interest rate forecast has increased over the past month, given the persistent surge in food, oil and other commodity prices. However, the economic upswing remains fragile and hiking interest rates would do little to contain inflation, which is being driven by exogenous factors. We think that the Reserve Bank will keep interest rates unchanged for longer than the market expects, tightening policy in early 2012 only," said Nedbank. - BuaNews