South African Producer-Price Inflation Slows to 5.1%
South African producer prices rose at the slowest pace in more than two years in August, allowing the Reserve Bank to keep its benchmark interest rate unchanged to help support growth in Africa’s biggest economy.
The cost of goods leaving factories and mines rose 5.1 percent, compared with 5.4 percent in July, Pretoria-based Statistics South Africa said on its website today. The median estimate of 12 economists surveyed by Bloomberg was 5.3 percent. Prices rose 0.7 percent in the month.
“It’s painting a fairly moderate picture for overall inflation,” Elize Kruger, a Johannesburg-based economist at KADD Capital who correctly forecast the increase, said in a phone interview. “I don’t think there is enough upward price pressure to make the Reserve Bank uncomfortable.”
The Reserve Bank left its repurchase rate unchanged at 5 percent last week, after reducing it by half a percentage point for the first time in 20 months in July. Slower growth in producers’ costs may ease pressure on consumer-price inflation, which accelerated to 5 percent in August from 4.9 percent in the previous month. The central bank aims to keep the inflation rate within a range of 3 percent to 6 percent.
The bank on Sept. 20 cut its forecast for economic growth this year to 2.6 percent. The economy expanded 3.1 percent in 2011.
A 1.4 percent month-on-month fall in grain prices is positive for the outlook in food inflation, Kruger said.
The rand was at 8.2179 a dollar at 12:30 p.m. in Johannesburg, down from 8.2109 before the release of the data. The yield on the government 6.75 percent bonds due 2021 gained 1 basis point to 6.45 percent.
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