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Johannesburg - Statistics South Africa said on Thursday producer inflation, which represents domestic output, slowed to 10.1% year-on-year (y/y) in November from 10.6% in October.
The market was expecting the producer price index (PPI) to be at 10.5% y/y and 0.6% on a monthly basis. Month-on-month inflation was at 0.2% in November from -0.3% previously.
Citadel economist Salomi Odendaal said a slowdown in commodity prices contributed.
"But PPI is still considerably higher than the top end of the CPI (consumer price index) inflation target, and that indicates we’ll still have some pressure on consumer inflation from higher commodity prices. The imported PPI rise must be the weakness of rand coming through there.
"In some prices, particularly food prices, you see it pretty quickly. That would be the effect of the weakness of the rand and that’s another danger for inflation going forward that makes imports more expensive.”
Christie Viljoen, an economist at NKC Independent Economists, said another a big increase was expected in December because of the weak rand.
The consumer price index rose to 6.1% y/y in November - a 20-month high and the first time it was outside the Reserve bank’s 3% to 6% target since January 2010.
Statistics South Africa plans sweeping changes to PPI that will make it a more relevant indicator for consumer prices from 2013.
The central bank has left its repo rate unchanged at 5.5% so far this year, after reducing it by 650 basis points in the two years to end-2010.
The market was expecting the producer price index (PPI) to be at 10.5% y/y and 0.6% on a monthly basis. Month-on-month inflation was at 0.2% in November from -0.3% previously.
Citadel economist Salomi Odendaal said a slowdown in commodity prices contributed.
"But PPI is still considerably higher than the top end of the CPI (consumer price index) inflation target, and that indicates we’ll still have some pressure on consumer inflation from higher commodity prices. The imported PPI rise must be the weakness of rand coming through there.
"In some prices, particularly food prices, you see it pretty quickly. That would be the effect of the weakness of the rand and that’s another danger for inflation going forward that makes imports more expensive.”
Christie Viljoen, an economist at NKC Independent Economists, said another a big increase was expected in December because of the weak rand.
The consumer price index rose to 6.1% y/y in November - a 20-month high and the first time it was outside the Reserve bank’s 3% to 6% target since January 2010.
Statistics South Africa plans sweeping changes to PPI that will make it a more relevant indicator for consumer prices from 2013.
The central bank has left its repo rate unchanged at 5.5% so far this year, after reducing it by 650 basis points in the two years to end-2010.
