THE PRICE of goods leaving South African factories and mines rose at a faster pace in June than the previous month, reflecting the increased cost of food, fuel and electricity.
Producer prices increased 7.4 percent from a year earlier after gaining 6.9 percent in May, Statistics SA said yesterday. Prices advanced 4.4 percent in the month.
Higher factory gate prices may feed through to consumer inflation, placing pressure on the Reserve Bank to raise interest rates from a 30-year low.
The consumer inflation rate rose to a 15-month high of 5 percent last month from 4.6 percent in May, with the central bank’s inflation target range being between 3 percent and 6 percent.
“Year-on-year producer price inflation has displayed some volatility in recent months, partly a result of commodity price fluctuations,” Reserve Bank governor Gill Marcus said last week, when the bank left the benchmark interest rate unchanged at 5.5 percent. “Food and oil price developments remain the major risks to the inflation outlook.”
Food prices rose 7.3 percent year on year in June, while fuel lifted 21 percent and electricity 19 percent. Crude prices are more than 20 percent higher than a year ago. – Bloomberg