Mercado Released [4 May 2015]: The Producer Price Index

Producer prices climbed in March, on the back of higher food, tobacco and beverage prices. PPI for the third month of the year moved to 3.1% on a year-on-year basis and 1.8% on a month-on-month basis. PPI is a relative measure of the average change in the price of a basket of representative goods and services sold by manufacturers and producers in the wholesale market. The PPI is widely used by businesses as a contract escalator and as a general indicator of inflationary pressures in the economy. The main contributors (food, beverages and tobacco) added 6.0% towards the PPI figure. The increase
in the petrol price has also put further pressure on the PPI. In the upcoming months, both CPI and PPI will continue the upward trend, as South Africans feel the pinch of higher energy prices. Electricity tariffs are expected to increase in July as the power producer Eskom continues to roll out load shedding – this will see the PPI for water and electricity increase further. The extremely volatile rand and the oil price could also lead to higher petrol prices in the upcoming months.

For more on the economy read this week’s NMG Mercado here

Week 19 2015