Good news for Reserve Bank interest rates as producer inflation drops

Lesetja Kganyago

South African producer prices rose less than expected last month on slowing fuel inflation that’s expected to ease further in December.

The annual rate declined to 4.6% in November — lower than all eight estimates by economists in a Bloomberg survey — from 5.8% in October, according to data published Thursday by Pretoria-based Statistics South Africa.

The median forecast in the poll was 5.1%.

The easing in producer inflation — an early indicator of movements in consumer-goods prices — was helped by big drop in the cost of coke, petroleum, chemical, rubber and plastic products, along with slowing food inflation. 

Diesel prices fell 5.4% from a year earlier, while petrol inflation slowed by 11.7 percentage points from the previous month to 3.7%, the Statistics South Africa data showed.

A further reprieve is expected in December: the Department of Mineral Resources and Energy announced earlier this month that the retail cost of 95 octane gasoline fell by almost 65 cents a litre, and the wholesale diesel price by more than R2.35 a litre.


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