Cape Town - The price of most locally produced
goods will not rise in the immediate
future. That is the glimmer of light
provided by economists and financial
analysts, following the release of the
latest Producer Price Index (PPI) data
from Stats SA.
Global head of currency strategy and market research at ForexTime (FXTM), Jameel Ahmad, said: “Recent PPI releases indicated weaker price pressures, an indicator that can support consumer optimism as the prices of goods should remain at a lower cost when customers purchase them.”
However, Ahmad warned: “This can become a double-edged sword for South Africa over the coming months, when taking into account that the global economy has on a productivity level been shut down, while the local currency weakening about 20% so far in 2020 will risk driving up the costs of imports.
“Trends of bulk buying and panic shopping are also making waves across the world, meaning that the supply of certain goods cannot realistically meet the demands of consumers. Therefore we should also expect that the prices of some items, including food and groceries, could also increase over the coming period,” said Ahmad.
FNB senior economist Siphamandla Mkhwanazi said: “Looking ahead, we expect the PPI to remain subdued as lacklustre domestic demand becomes increasingly pronounced amid the Covid-19 lockdown.
“Moreover, low oil and fuel prices relative to the previous year should limit any meaningful acceleration in prices.”
PPI inflation in February slowed due to lower non-metallic mineral products inflation, which eased to 4.3% year-on-year in February from 8% in January, and lower paper and printed products inflation, which decelerated to 3% in February from 3.1% in January.
The Steel and Engineering Industries Federation of Southern Africa has welcomed the latest PPI data from Stats SA with regard to intermediate manufactured goods, as this indicates a further increase in selling price inflation in the metals and engineering cluster of industries.
Economist Marique Kruger said: “An increasing trend in the PPI for intermediate manufactured goods bodes well for producers in the sector, who have the leeway to recover the losses incurred due to volatility in input costs, thereby enabling them to improve on margins.”
@MwangiGithahu