PRODUCER inflation slowed in August, with the producer price index (PPI) rising 7.2% year on year, after the 7.4% increase reported last month for July. The main contributors to the annual rate of 7.2% were: • Food products, beverages and tobacco products (four percentage points); and • Metals, machinery, equipment and computing equipment (1.1 percentage points). Producer inflation ultimately feeds into consumer inflation, which the Reserve Bank targets for monetary policy. Before Statistics SA’s release of the data on Thursday, economists were divided over whether recent fuel price cuts — of more than R1 a litre in the past two months — were enough to have offset high and rising food inflation. Opec’s surprise agreement, reached on Thursday, to cut oil production puts further petrol price cuts for SA in doubt, a stronger rand notwithstanding.
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