Production inflation posted a surprisingly sharp fall in June — slowing to 4% year on year, from 4.8% in May. Investec and Trading Economics had forecast that the producer price index (PPI) rose 4.6% year on year in June. Compared with May 2017, producer prices fell in June — decreasing 0.3%, after rising 0.5% in May from April. Food and fuel prices were key factors in the headline PPI outcome. The easing of the drought in most of SA, and improved agricultural production as a result, has continued to bring down food prices. At 25.17%, the food category makes up the largest portion of the PPI. Food prices rose 4.7% from a year earlier, slowing from 5.8% in May. Grain prices fell 15% in June from a year earlier, but meat prices rose 17%. Dairy prices were up 1.9%, fruits and vegetables rose 3.6%, and fish rose 4.6%. Prices of oils and fats fell 3.4%. Prices in the broader category of meat, fish, fruit, vegetables, oils and fats were up 10.2%.
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