Johannesburg - South African producer inflation, which represents domestic output, fell to 4.2% year-on-year in September compared with 5.1% in August, Statistics South Africa said on Thursday.
On a month-on-month basis, prices at the factory gate dropped by 4% in September after a 0.7% increase in August.
Elna Moolman, economist at Renaissance Capital said that although the headline number was a little bit lower than expected, food prices continued to show some upward pressure, and generally, consumer goods within the PPI basket showed some pressure.
“The headline number doesn’t necessarily extrapolate the good news from the consumer inflation perspective.
“Our baseline view remains the Reserve Bank is going to keep rates on hold at current levels for at least 2012 and 2013.”
Investec Group economist Annabel Bishop agreed.
“We still do not expect the SARB to cut interest rates again this year, as CPI inflation is the relevant measure and it is likely to rise above 6.0% during the MPC’s inflation target period.”
Colen Garrow of Meganomics said the figure indicates manufacturers are still holding on to some of the price increases themselves and not passing them on to the price chain for fear of losing market share.
“I do not think it is sustainable. But the number is good. I do not think it will change anything on monetary policy.”
The rand was little changed at R8.6926/$ at 12:00 from R8.69 just before release of the data at 11:30 while the yield on the 2015 bond was at 5.44% from 5.455%.
Statistics South Africa plans sweeping changes to PPI that will make it a more relevant indicator for consumer prices from 2013.
For now, the index is dominated by commodities and tends to move in tandem with those prices, with little pass-through to consumer inflation.
On a month-on-month basis, prices at the factory gate dropped by 4% in September after a 0.7% increase in August.
Elna Moolman, economist at Renaissance Capital said that although the headline number was a little bit lower than expected, food prices continued to show some upward pressure, and generally, consumer goods within the PPI basket showed some pressure.
“The headline number doesn’t necessarily extrapolate the good news from the consumer inflation perspective.
“Our baseline view remains the Reserve Bank is going to keep rates on hold at current levels for at least 2012 and 2013.”
Investec Group economist Annabel Bishop agreed.
“We still do not expect the SARB to cut interest rates again this year, as CPI inflation is the relevant measure and it is likely to rise above 6.0% during the MPC’s inflation target period.”
Colen Garrow of Meganomics said the figure indicates manufacturers are still holding on to some of the price increases themselves and not passing them on to the price chain for fear of losing market share.
“I do not think it is sustainable. But the number is good. I do not think it will change anything on monetary policy.”
The rand was little changed at R8.6926/$ at 12:00 from R8.69 just before release of the data at 11:30 while the yield on the 2015 bond was at 5.44% from 5.455%.
Statistics South Africa plans sweeping changes to PPI that will make it a more relevant indicator for consumer prices from 2013.
For now, the index is dominated by commodities and tends to move in tandem with those prices, with little pass-through to consumer inflation.