Producer price inflation rose in December, matching market forecasts, driven in part by changes in the fuel price.

Producer inflation increased an annual 3.4%, spot on with market expectations, and came off record lows experienced in November, when it reached its lowest levels since 2012.

For the full year, however, factory gate prices averaged their lowest levels in four years.

Producer inflation, as measured by the annual change in the producer price index (PPI), came in at 4.6% for 2019, its lowest level since 2015, when the reached 3.6%.

December’s increase was in line with the expectations of a number of economists ahead of the print, who noted the likely uptick as fuel prices base effects begin to wear off.

According to Stats SA, coke, petroleum, chemical, rubber and plastic products were one of the three main contributors to the increase, rising 2.4% year on year and contributing 0.5 of a percentage point to the overall increase. Petrol prices rose 6.7% year on year in December, coming off November's decline of -7.3%.

Food products, beverages and tobacco products increased by 3.2% year-on-year and contributed 1.1 percentage points. While metals, machinery, equipment and computing equipment increased by 3.9% year on year and contributed 0.6 of a percentage point, according to Stats SA.

The slowdown in the full-year rate comes as demand in SA’s economy remains weak, amid poor growth expectations and battling consumers.

The moderation in producer inflation follows the release of consumer inflation last week, which showed that it averaged 4.1% in 2019, its lowest level since 2005. This was comfortably below the midpoint of the SA Reserve Bank’s 3%-6% target range.