SOUTH Africa’s producer prices in July tracked consumer prices and rose to a fresh peak, mainly driven by petroleum and chemical products, food and beverages as well as metals and machinery.
This means that consumers will continue paying higher prices for goods and producers pass on the input costs to the end-users amid elevated headline inflation, which reached 7.8 percent in July.
Data from Statistics South Africa (StatsSA) yesterday showed that the annual producer price inflation (PPI) at the factory gate reached a fresh record high of 18 percent in July, up from another record of 16.2 percent in June.
This latest PPI print crept closer to the all-time high reached during the 2008 global financial crisis and was above market forecasts of 17.3 to 17.6 percent.
StatsSA said the main upward contribution in the PPI came from coke, petroleum, chemical, rubber and plastic products, food products, beverages and tobacco products, metals, machinery, equipment and computing equipment and paper and printed products.
Within the coke, petroleum, chemicals, rubber and plastic products category, prices for petrol and diesel accelerated further, up by 61.9 percent from 53.6 percent, and by 69.9 percent from 59.3 percent, respectively. Prices of chemical products also grew at a faster pace, up by 21.3 percent over the year.
Additionally, manufactured food price inflation accelerated for the sixth successive month, increasing by a notable 15.1 percent from a year ago from 13 percent previously. Meat and meat products inflation rose by 13.8 percent from a prior 12.7 percent.
Nedbank economist Tachin Ramnath said producer inflation remained under pressure, with prices at the factory gate recording double-digit growth since the start of the year.
Ramnath said global commodity prices rose sharply due to a surge in consumer demand post-lockdowns, but global supply chains had shown signs of improvement as international Covid-19restrictions had largely faded.
BUSINESS REPORT