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South African Producer Prices Rose 5.8% Using New Index

The cost of goods leaving South African factories rose 5.8 percent in January from a year ago, according to a new index compiled by the statistics office.

Producer-price inflation for final manufactured goods slowed from 6.3 percent in December, Statistics South Africa said in a report released in the capital, Pretoria. Prices rose 0.5 percent in the month.

South Africa reduced the number of items in the basket used to calculate PPI to 273 from 800 and now publishes separate indexes for agriculture, mining, electricity and intermediate manufactured goods. The steps were taken to bring the index in line with international standards, the agency said.

The Reserve Bank has held its benchmark interest rate at 5 percent, the lowest level in more than 30 years, since a surprise cut in July. The bank’s mandate is to keep consumer- price inflation within a range of 3 percent to 6 percent. It fell to 5.4 percent in January from 5.7 percent in the previous month.

A weaker rand is adding to price pressures. The currency has dropped 6.8 percent this year against the dollar, the worst performer of the 25 emerging-market currencies tracked by Bloomberg.

PPI calculated under the old method was 5.2 percent in December, the same as the previous month.

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

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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