October producer price inflation (PPI) came out above market expectations, due to a greater than expected rise in the contribution from mining, quarrying, and agriculture.
PPI was recorded at 5.2 percent year-on-year for the month, while the market had expected 4.8 percent year-on-year.
“The key positive price inflation contributors on the month were agricultural prices, mining and quarrying, products of petroleum and coal, and food at the manufacturing level,” said Investec economist Annabel Bishop in a statement.
Domestic grain price inflation fell to 11.6 percent year-on-year, well below the 27.6 percent recorded for July.
But this was still above the inflation rate for grain retail products such as breads and cereal, putting further pressure on food prices.
This would push up consumer price inflation (CPI) - headline inflation - from its current 5.6 percent year-on-year.
Mining and quarrying and petroleum products saw higher price inflation on rand weakness.
“We still do not expect the (SA Reserve Bank) to cut interest rates in 2013,” she said.
The Reserve Bank target inflation range is between four and six percent.
CPI was likely to rise above six percent in 2013.
It could potentially only fall within the inflation target range in the second half of next year, but would probably still be close to the upper limit during the period. - Sapa