SA September PPI slows to 16.3%

Statistics South Africa has released the latest Producer Price Index (PPI) report for September, showing a slight easing in inflation rates to 16.3%. CNBC Africa’s Fifi Peters spoke with Patrick Kelly, Chief Director at Statistics South Africa to discuss the trends and implications of these numbers. Kelly explained that while the PPI for manufacturing has decreased from the previous month, it is still relatively high compared to historical standards. The report also highlighted the inflation rates in other sectors such as mining and agriculture, with mining experiencing a jump to 30.1% due to a significant increase in coal prices. Kelly pointed out that there is a noticeable downward trend in inflation at both the producer and consumer levels, signaling a potential easing of price pressures in the economy. However, he cautioned against prematurely declaring a peak in inflation, citing ongoing uncertainties in the international environment as key drivers of inflation. The data indicates that while there has been some relief in recent months, there may still be lingering pressures in certain parts of the economy that could impact future inflation figures. Kelly emphasized the importance of closely monitoring key products such as food inflation, which has shown varying rates of increase across different sectors. He noted that while producer inflation may not immediately translate to consumer inflation, there is a gradual flow-through effect that eventually moderates price changes at the consumer level. Despite some moderation in the PPI and lower fuel prices, Kelly warned that food inflation remains at its highest level since 2013, suggesting that the economy may not be out of the woods yet in terms of inflation. Looking ahead, Kelly suggested that producer inflation tends to be more volatile than consumer inflation, with retailers playing a role in managing the timing of price pass-throughs to consumers. He anticipated a potential lag in the adjustment of consumer prices to reflect changes in producer prices, indicating that a catch-up in consumer inflation could be on the horizon. Overall, the September PPI report presents a mixed picture of relief and ongoing challenges in the South African economy, underscoring the need for continued vigilance in monitoring inflation trends and their impact on consumers.