CAPE TOWN: Producer inflation slowed unexpectedly last month compared with a year ago as food prices, which make up 25% of the producer inflation basket, rose at a slower pace.
Despite producer inflation for final manufactured goods having moderated slightly to 3% year on year from 3.1% in March, economists expect it and consumer inflation to accelerate in coming months on rising food and fuel prices. Producer inflation was up 0.9% during the month. Manufacturers have been “absorbing” higher water and electricity prices which they have not passed on to consumers because of “muted market conditions”, Manufacturing Circle executive director Coenraad Bezuidenhout said.
Mr Bezuidenhout added, however, that higher labour costs, as well as steep electricity and water tariffs, would force manufacturers to pass costs on to consumers at some point. Any favourable commodity price developments on producers’ costs were being partly mitigated by high administered tariff increases, particularly electricity, said Investec economist Kamilla Kaplan. The petrol price has been rising since March, and an increase of about 50c/litre is expected to be announced on Friday for next month.
