The cost of goods leaving South African factories rose at a faster pace in March than the previous month as a weaker rand boosted import prices,
Producer-price inflation for final manufactured goods accelerated to 5.7 percent from 5.4 percent in February, Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 10 economists was 5.5 percent. Prices rose 0.9 percent in the month.
Producer inflation “is likely to moderate in the months ahead, dragged down by lower commodity prices as global growth slows,” Dennis Dykes, chief economist at Nedbank Group Ltd. (NED), said in an e-mailed note to clients. “However, upward pressure is likely to stem from higher prices of electricity and a weak rand.”
The rand has gained 0.6 percent against the dollar this month, paring its decline for the year to 6.7 percent, while the price of oil has slumped 8.1 percent since April 1. The Reserve Bank last month held the benchmark repurchase rate at 5 percent, the lowest level in more than 30 years, as the rand’s drop threatened to stoke inflation.
The currency gained 0.6 percent to 9.0789 per dollar at 12:05 p.m. in Johannesburg, the strongest in about two weeks.
A weaker rand and higher fuel prices pose the main risk to the inflation outlook, Reserve Bank Governor Gill Marcus said on April 19. The bank is forecasting that consumer-price inflation will temporarily breach the target of 3 percent to 6 percent later this year. The inflation rate was unchanged at 5.9 percent in March.
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