Bloomberg News

South Africa Producer Price Inflation Accelerates as Rand Drops

October 27, 2011

Oct. 27 (Bloomberg) -- The cost of goods leaving South African factories and mines rose 10.5 percent in September from a year ago as a weaker rand boosted imports and fuel prices increased.

Producer price inflation accelerated from 9.6 percent in August, Pretoria-based Statistics South Africa said on its website today. The median estimate of 10 economists surveyed by Bloomberg was for 10.4 percent. Prices decreased 3.3 percent in the month.

“We expect general producer prices to have continued to be driven by higher food, fuel and electricity prices over the month,” Dennis Dykes, chief economist of Nedbank Group Ltd., said in a note to clients before today’s data.

The rand slumped 14 percent in September, the biggest decline in almost three years, driving the cost of imports higher and threatening to boost consumer prices. The Reserve Bank has kept its benchmark lending rate unchanged at a 30-year low of 5.5 percent this year even as it forecast inflation may breach the 3 percent to 6 percent target range in the fourth quarter.

The government boosted gasoline prices 1.7 percent in September.

--Editors: Nasreen Seria, Karl Maier

To contact the reporter on this story: Andres R. Martinez in johannesburg at amartinez28@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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