Producer inflation came in much cooler than expected in July, but risks around petrol prices paint a muddier picture for the months ahead.
South Africa’s Producer Price Inflation has come in at 4.2% in July, lower than the expected 4.5% and down from 4.6% in June.
Fruit and vegetable prices rose by a slower 9.3% yoy from 10.9% in June, while ‘other food products’ eased to 4.5% from 5.6%. “The increase partly reflected the fading impact of last year’s high base, but probably also the impact of the drier weather conditions experienced earlier in the year,” the bank said.
“These declines were facilitated by a steady rand and some moderation in global oil prices. Prices of chemical products, as well as rubber and plastic products, also slowed,” it said. However, textiles and leather goods prices slowed sharply to only 0.9% from 6.4% on base considerations. However, the upward pressure will partly be mitigated by lower global inflation and the higher rainfall expected in the coming season.“While relatively subdued global demand and ample supply will keep oil prices in check over the short term, ongoing geopolitical tension, particularly the Israel–Hamas, and the Russian-Ukraine conflicts,“If the rand could maintain its resilience against the US dollar, it would help to mitigate the risks,” Nedbank said.
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