1 Aug 2022
On 28 July 2022, Stats SA published the producer price indices (PPI) which is a measure of the average change in the prices of goods either as they leave their place of production or as they enter the production process. As an economic indicator, PPI is used as a short-term indicator of inflationary trends and for indexing long-term contracts for inflationary risk out of the contract in contract price adjustments.
The annual percentage change in the PPI for final manufactured goods in South Africa broke a fresh record high for a fourth consecutive month to reach 16.2% in June of 2022, above market forecasts of 15.8%.
The increase in PPI mainly came from coke, petroleum, chemical, rubber, and plastic products (37.2%); food products, beverages, and tobacco products (10.1%); and metals, machinery, equipment, and computing equipment (14%). Compared to the previous month, producer prices rose 2.1%.
Overall the inflationary outlook domestically poses a concern at the consumer level and at the industrial production level as high unemployment rates, weaker exchange rates, rising fuel costs, and escalating electricity costs continue to pose significant barriers to the recovery and growth of the sector.