South African Producer-Price Inflation Unchanged at 5.2%
South African producer-price inflation was unchanged at 5.2 percent in December, giving the central bank room to keep interest rates at their lowest level in more than 30 years to stimulate growth.
The cost of goods leaving factories and mines fell 0.1 percent from the previous month, Pretoria-based Statistics South Africa said on its website today. The median estimate of 12 economists surveyed by Bloomberg was for an annual gain of 5.5 percent.
Economists predicted producer-price inflation will accelerate as fuel and food prices rose and the rand weakened. The currency dropped 6.5 percent against the dollar since the start of this year, the world’s worst performing currency after Malawi’s kwacha, boosting import costs.
“The short-term outlook towards inflation doesn’t look good,” Colen Garrow, said in an e-mailed note to clients before the data was released. “A lot will depend on the rand exchange rate. The year hasn’t got off to a good start.”
Every 1 percent decline in the rand adds as much as 0.2 percentage points to inflation, according to Johannesburg-based Standard Bank Group Ltd. The central bank aims to keep consumer- price inflation, which accelerated to a seven-month high of 5.7 percent in December, within a range of 3 percent to 6 percent.
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