Producer inflation accelerates unexpectedly in November
Farm and factory gate inflation, as measured by the annual change in the producer price index (PPI), rose to 5.1% in November from 5% in October, surprising economists who had expected it to fall slightly.
Statistics SA data showed that the index, which was set to 100 in December 2016, rose to 104.6 points in November from October’s 104.1 points.
The food component of PPI accelerated to 1.9% from October’s 1.5%, with wholesale meat prices rising 13.5% in November from the same month in 2016. In October, meat inflation was 12.6%.
Producer inflation accelerated despite annual petrol price increases slowing to 7.5% from 11.5% while diesel inflation slowed to 9.2% from 13.3%.
Electricity prices rose 3% from 2.3% while water price inflation remained at 10.5%.
SA’s inflation has abated thanks to good rainfall leading to bumper crops. Deflation of cereals and other crops moderated to 27.1% in November from October’s 28.6%.
The rise in producer inflation contrasted with consumer inflation, which Stats SA reported on Wednesday had slowed to a better than expected 4.6% in November from 4.8% in October.
Producer inflation tends to swing more wildly than consumer inflation as retailers tend to average out price volatility in commodity prices to avoid upsetting customers.