JOHANNESBURG – Data released on Thursday by Statistics South Africa showed that producer price inflation (PPI) reached its highest level since December 2016 in August, increasing 6.3 points on a yearly basis.
The August inflation print was also above market expectations of a 5.95 percent gain.
On a month-on-month basis, the PPI increased 0.6 percent against a market consensus of a 0.45 percent increase.
Elize Kruger, an analyst at NKC African Economics, said August’s PPI release reflected some pass-through of recent rand depreciation to the production costs of factories and manufacturers.
“This could in time spill over to consumer prices, driving Consumer Price Inflation closer to the SA Reserve Bank’s (Sarb's) 6 percent upper target level,” Kruger said.
In a split decision last week, Sarb decided to keep the repurchase rate unchanged at 6.5 percent per annum.
Four members of the bank’s monetary policy committee preferred an unchanged stance, while three of their colleagues preferred a 25 basis points increase. Food inflation came in at 4.9percent in August.
– BUSINESS REPORT