Johannesburg - South Africa's producer price index (PPI) rose by 16.0% year-on-year (y/y) in September from 19.1% year-on-year (y/y) in August, Statistics South Africa (Stats SA) data on Thursday showed.
The PPI dipped -3.5% on a monthly basis after August's monthly increase of 0.5%.
PPI was expected to be at 18.1% y/y, a survey by I-Net Bridge found, with forecasts ranging from 14.4% y/y to 20.4% y/y.
Exports were at 9.7% y/y from 7.8% in August.
Imports were at 19.9% y/y from 23.0% the month before.
Stats SA attributed the rate in September to decreases in the annual rate of change for products of petroleum and coal (36.0% to 31.9%), electricity (33.1% to 29.9%) mining and quarrying (15.0% to 7.2%) and agricultural products (2.3% to 0.7%).
These were counteracted by increases in basic metals (from 46.5% to 49.9%) and forestry (10.4% to16.1%).
The jump into double digits in October 2006 was the first double-digit increase since December 2002.
The annual average for PPI in 2007 was 10.0% from the 7.7% recorded in 2006. The annual average for PPI in 2005 was just 3.1%. PPI was at an average of 0.6% in 2004, 1.7% in 2003 and 14.2% in 2002.
The 2004 average was the lowest since 1959, when there was no change in producer prices. The lowest annual consumer inflation in the post-1945 period was also in 1959 at 1.1%.
New weightings were introduced in the January 2008 data, but with no backdating. The new weightings now also make it difficult to use PPI as a leading indicator of CPI.
Economists said that the drop in PPI was further evidence that a rate hike was unlikely.
T-Sec economist Mike Schü:ssler said, "At 16% the number is quite a lot down and that is very good news. It is good news for the bond market and it is certainly further evidence that we are not going to get a rate hike.
"But it still remains very high at 16%. The rand's recent fall will probably only come up in the November number - and that will be one for us to watch."
Ian Marsberg economist at Absa said: "The numbers are much better than expected.
"It seems that, together with the credit data as well as the inflation data, the pass-through effects to consumer inflation are easing. That is good news for the Reserve Bank."
Investec Group economist Kgotso Radira said, "PPI inflation came out significantly lower than expected due to lower rand prices of commodities. Going forward, if commodity prices remain at relatively low levels, we can expect PPI inflation to moderate even further.
"The risk to this positive outlook is the rand exchange rate - if it depreciates further, then inflation in general will remain elevated for longer.
"The CPIX figure yesterday showed that inflation at the retail level moderated, which is positive for the interest rate outlook. Based on the positive inflation outlook both at the producer and retail level, we do not expect any more interest rate hikes this year.
"The next move in interest rates should be down instead, from as early as potentially April next year, depending on the rapidity with which inflation regains target following the publication of the new consumer inflation series."
- I-Net Bridge