Producer inflation comes in better than expected
Food and fuel remain the key drivers of a higher overall PPI — and new taxes and levies could undermine the benevolent effects of an easing drought
Producer inflation slowed more than expected in January, in possible good news for consumer inflation in coming months. The producer price index (PPI) for final manufactured goods — considered the headline producer inflation figure — increased 5.9% in January from a year earlier. That compared with an unrevised 7.1% increased in December. FNB economists had forecast that January’s PPI is would moderate to 6.9%. Food products, beverages and tobacco products were one of the main contributing factors to the January increase, rising 9.5% and accounting for 3.1 percentage points. Food inflation is expected to start moderating as the severe drought that has gripped the country eases in some areas. Prices of meat, fish, fruit, vegetables, oils and fats rose 10.3%; dairy prices were up 13.5%. But grain prices and animal feeds rose just 5.4%, which could help bring down prices of downstream food products. However, another increase in sin taxes announced in by Finance Minister Pravin Gordhan ...
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