South Africa’s monthly producer inflation hits record high

South Africa’s monthly producer inflation accelerated to a record in April, as higher fertiliser and energy costs tied to the Iran war pushed up prices.

The rate soared to 3% from 1.1% in March — the biggest monthly jump since the beginning of the current producer price index series in 2012, according to data published Thursday by Pretoria-based Statistics South Africa. The median estimate of five economists in a Bloomberg survey was 2.8%.

The annual rate climbed to 4.8% in April from 2.3% the previous month, the highest level in two years. The coke, petroleum, chemical, rubber & plastic products category was the main contributor to the annual and monthly rates.

The surge reflects a broader global shock as the conflict with Iran disrupts energy flows through the Strait of Hormuz, a critical chokepoint for liquefied natural gas, oil and about a third of nitrogen fertiliser trade.

The data shows diesel costs rose 39.4% and petrol 18.3%, the biggest increases since the PPI series began, while fertiliser prices posted record gains between March and April.

PPI, an early indicator of consumer goods inflation, may strengthen the case for further interest-rate hikes after the central bank raised its benchmark by 25 basis points to 7% on Thursday.

Governor Lesetja Kganyago warned that there has already been “one global inflation surge this decade, and we may well be starting another.” In such situations, central banks must maintain their credibility and prevent inflation from becoming entrenched, he said.

While monetary policy cannot offset the initial impact of supply shocks, it remains responsible for containing inflation over the longer term, Kganyago said, reiterating the bank’s commitment to returning price growth to its 3% target over time. Inflation is currently at 4% and is forecast by the central bank to only return to target in 2028.