Agricultural products contributes to higher PPI

The rapidly rising prices at which agricultural produce is leaving the farm gate played a big role in South Africa’s general inflation rate.

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Statistics South Africa revealed that Producer Price Index (PPI) for manufactured goods was up 8,2% in March, compared to a year ago. In February this figure was 7,7% year-on-year. From February to March 2014 prices increased by 1,3%.

The price of food products increased sharply by 8% year-on-year, contributing 2,9 of a percentage point to the PPI.

The category for agriculture, forestry and fisheries showed a PPI of 11,7% on a yearly basis in March, compared with 8% in February, and a 2,2% increase from month-to-month.

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Prices of agricultural products increased by 13,3% year-on-year in March, and contributed 10,5 of a percentage point to the PPI. On a monthly basis it increased by 2,2%.

The PPI for intermediary produced goods was 10,1% in March compared to the previous year, down from 10,5% in February. Month-to-month prices increased by 0,8%.

The PPI for water and electricity was 14,6% in March, compared to 14,5% in February, and decreased by 1,6% on a monthly basis.

The PPI for mining in March was lower. Prices increased 3,7% on a yearly basis from 5,3% in February and were 1,2% lower month-to-month.

The Consumer Price Index (CPI) was 6% in March, according to Statistics South Africa. Some economists say this figure could encourage the Reserve Bank to increase the interest rate in May or July, but others say the central bank will rather wait as long as possible, due to sluggish economic activity.