PPI at 9.8%

Pretoria – The Producer Price Index (PPI) slowed to 9.8% year-on-year in December, Statistics South Africa (Stats SA) said on Thursday.

“This rate is 0.3 of a percentage point lower than the corresponding annual rate of 10.1% in November 2011,” said Stats SA.

PPI – which is the price of goods leaving factories and mines – was expected to have eased to 10.0 % year-on-year.

Stats SA attributed the lower rate to decreases in mining and quarrying, electrical machinery and apparatus components, among others.

“The hawkish statement by the [Monetary Policy Committee] last week suggests that the Reserve Bank is concerned about inflation and the sluggish growth prospects. Rising inflationary pressures, against the backdrop of fragile domestic economic conditions, will likely give the [South African Reserve Bank] more leeway to keep interest rates on hold. Standard Bank sees interest rates unchanged throughout 2012.”

In 2011 the average PPI for domestic output was 8.4%. – BuaNews