Business
Producer inflation defies expectation, slowing to 4%─── 15:36 Thu, 27 Jul 2017
The headline Producer Price Index (PPI) or producer inflation dropped to 4% year-on-year in June from 4,8% in the month of May.
This follows a drop in the Consumer Price Index (CPI) or consumer inflation which was said to have been a contributing factor in the Reserve Bank’s decision to lower interest rates last week. According to Economics lecturer at the University of the Free State, Dr Sevias Guvuriro, the drop in producer inflation is an added relief to South Africans, in the aftermath of the country entering a technical recession and being downgraded by credit downgrading agencies earlier this year.
The main contributors to the PPI drop were coke, petroleum, chemical, rubber and plastic products.
“Consumers may not feel the immediate effects of lower producer inflation but they should know that whenever producers incur fewer costs in their process of production, it will eventually cascade to consumers,” says Guvuriro.
OFM News/Olebogeng Motse
