SA's PPI slows down in May

Cape Town - The headline Producer Price Index (PPI) slowed to 6.5% in May compared to 7% in April, according to data by Statistics SA.

The PPI measures changes in the prices of locally produced commodities.

The PPI for final manufactured goods increased by 0.3% from April 2016 to May 2016.

"The main contributors to the annual rate of 6.5% were food products, beverages and tobacco products as well as metals, machinery, equipment and computing equipment and transport equipment," said Stats SA.

"The contributors to the monthly increase of 0.3 percentage points were food products, beverages and tobacco products, coke, petroleum, rubber and plastic products and transport equipment."

The annual percentage change in the PPI for intermediate manufactured goods was 9% in May 2016 compared with 7.1% in April 2016.

From April 2016 to May 2016 the PPI for intermediate manufactured goods increased by 2.1%.

Stats SA said the main contributors to the annual rate of 9% were chemicals, rubber and plastic products , basic and fabricated metals and sawmilling and wood.

The main contributor to the monthly increase of 2.1% was basic and fabricated metals.

The annual percentage change in the PPI for electricity and water was 11.5% in May 2016, compared with 12.3% in April 2016.

The annual percentage change in the PPI for mining was 14.6% in May 2016 compared with 10.3% in April 2016. From April 2016 to May 2016 the PPI for mining increased by 4.6%.

The annual percentage change in the PPI for agriculture, forestry and fishing was 18.3% in May 2016 compared with 16.9% in April 2016.

From April 2016 to May 2016 the PPI for agriculture, forestry and fishing decreased by 1.1%.

In a note on Friday, invested economist Kamilla Kaplan expected the PPI to remain in the vicinity of 7%.

"Manufactured food price pressures reached the double digit range in March on the strong price increases earlier in the supply chain, linked to drought effects," she wrote.

"Indeed, producer price inflation for grains, at the agriculture level, remained high at 42.4% in April after having peaked at 79.2% in February."