FILE- In this Sept. 19, 2018, file photo a tractor operator picks potatoes at Brett Jensen Farms outside of Idaho Falls, Idaho. Sefisa said it is disappointed with the latest Producer Price Index data that was released today. (John Roark/The Idaho Post-Register via AP, File)
JOHANNESBURG -  The Steel and Engineering Industries Federation of Southern Africa (Sefisa ) said it is disappointed  with the latest Producer Price Index (PPI) that was released today. 

"The latest data for the PPI for intermediate manufactured goods is disappointing, indicating a further deterioration in selling price inflation in the Metals and Engineering (M&E) cluster of industries for December 2018," Sefisa economist Marique Kruger said today. 

The data, released by Statistics South Africa today, shows a slowdown in both the PPI for final manufactured goods and the PPI for intermediate manufactured goods from 6.8 percent in November 2018 to 5.2 percent in December 2018 and from 6.0 percent in November 2018 to 5.0 percent in December 2018, respectively. 


Kruger said the declining trend in PPI for intermediate manufactured goods is generally of concern to producers in the M&E cluster of industries since this PPI measures selling price inflation. 

“Although declining prices are beneficial to those who buy the M&E sector’s products, the same cannot be said of businesses in the sector, which are struggling to improve on declining operational surpluses and profit margins,” Kruger said. 

Moreover, Ms Kruger said the decrease in the PPI for intermediate manufactured goods has the potential of reducing the existing positive differential between input cost inflation and selling price inflation

She said it was necessary to maintain a positive differential between the selling price  inflation and input cost inflation not only to sustain current businesses, but to also assist  in creating new businesses in the medium to long term.

- BUSINESS REPORT ONLINE