Annual producer inflation was unchanged in April, with the headline producer price index (PPI) for final manufactured goods rising 0.5% year on year, Stats SA reported on Thursday.
The data showed that monthly price pressures remained firm in April, driven primarily by higher food, beverages and tobacco prices. This resulted in the headline figure exceeding consensus expectations by Investec and the Bureau of Economic Research.
Still, at 0.5%, annual PPI in March and April was the lowest positive rate recorded in nearly five years.
RMB chief economist Isaah Mhlanga said the latest PPI figures pointed to a relatively benign inflation picture.
“The overall trend suggests that producer prices are still quite low, meaning headline consumer prices will likely remain relatively low. PPI has been lower than the midpoint of 4.5% for 10 consecutive months, which suggests that we don’t have price pressures in the economy,” he said.
The benign reading largely reflects easing fuel prices, with the price of petrol and diesel falling 16.3% and 14.5% respectively, year on year in April.
Food, beverages and tobacco were once again the biggest contributors to the overall increase, rising 4.7% year on year and 0.9% month on month, and contributing 1.4% to the annual PPI and 0.3% points to the monthly rate.
The steepest monthly increases were reported for meat and meat products (6.3%), bakery products (2.2%), parts for transport equipment (2.7%) and furniture or other manufacturing (3%).
According to Investec economist Lara Hodes, April saw international food prices rise 0.2% month on month.
Mhlanga said this uptick in food price inflation was “not surprising, given that it reflects higher agricultural commodity prices from the end of last year and the beginning of this year that are being passed through, especially for grains.”
Mhlanga said this trend is likely to be temporary, with food price inflation expected to ease later in the year.
The PPI for intermediate manufactured goods — which reflects the cost of goods used in production — rose to 8.5% year on year from 7.4% in March, up 2.4% on a monthly basis.
“The rising costs of intermediate manufacturing products suggest that we may see some pressure on PPI in the months ahead, but this does not necessarily mean we will see a rapid increase in inflation,” said Mhlanga.
Prices in this category were buoyed by basic and fabricated metals, which rose 13.2% year on year, and chemical, rubber and plastic products (4.2%).
After easing in March, the cost of electricity and water rose sharply in April, reflecting the continued pressure on mining companies, manufacturers and other energy-intensive industries.
The cost of electricity and water rose 6.2% on a monthly basis and was 11.2% higher than one year prior.
Mining PPI eased to 4.1% year on year, from 5.9% in March, and rose by 3.2% in the month. The monthly increase was underpinned by increases in non-ferrous metal ores (3.7%) and gold and other metal ores (4.9%).
Annual inflation in the agriculture, forestry and fishing sector rose sharply to 4.4%, from 2.4% in March. On a monthly basis these prices were up 4.5%, primarily driven by the agricultural sector.
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