Producer price index (PPI) unchanged at 6.6%

Pretoria – The Producer Price Index remained unchanged at 6.6% in May, Statistics South Africa (Stats SA) said on Thursday.

In April, the PPI – or price of goods leaving factories and mines – was at 6.6%.

“From April 2012 to May 2012, the PPI for domestic output increased by 0.5%,” said Stats SA.

This was due to the increase in electricity prices, mining and quarrying among others while prices of agricultural goods fell by 0.1% over the month.

Market expectation was that it would ease to 6.4% in May.

“Producer inflation is expected to moderate as the base effect diminishes and softer global demand contains prices of certain commodities. With inflationary pressure easing, monetary policy will probably remain accommodative, supporting a fragile local economy given considerable downside risks emanating from a weak Europe and slower growth in key emerging markets, including China,” said Nedbank economists.

“We therefore expect interest rates to remain unchanged until around March 2013. If global conditions deteriorate dramatically, the chances of either a rate cut or rates remaining unchanged for longer increases,” it said. – BuaNews