Sept. 26 (Bloomberg) -- The rand weakened for a third day against the dollar after South African producer-price inflation unexpectedly accelerated on higher oil and food prices. Bonds declined.
Factory-gate prices for final manufactured goods in August quickened to 6.7 percent from 6.6 percent a month earlier, Statistics South Africa said today. The median estimate of seven economists surveyed by Bloomberg was 6.5 percent. The rand’s plunge against the dollar this year spurred increases in gasoline prices of 6.8 percent in July and 2.4 percent last month. The country relies on imports for 70 percent of its oil.
“Producer inflation is likely to remain elevated in the months ahead,” Dennis Dykes and Busisiwe Radebe, economists at Nedbank Group Ltd., wrote in an e-mailed note to clients. “The major risk to the outlook remains the rand, which has bounced back from recent lows, but remains volatile.”
The rand weakened 0.1 percent to 10.0024 per dollar by 6:21 p.m. in Johannesburg. Yields on South Africa’s 10.5 percent rand-denominated government bonds due December 2026 rose six basis points, or 0.06 percentage point, to 7.95 percent, the highest on a closing basis in almost a week.
South African’s economy is forecast to expand 2 percent this year, the slowest since a 2009 recession, according to the central bank. Labor unrest at the country’s mines, including platinum, gold and coal, has shaved 0.3 percentage point off expansion this year, President Jacob Zuma said in June.
Inflation is forecast to be an average of 5.9 percent this year, Reserve Bank Governor Gill Marcus said on Sept. 19. Consumer-price inflation accelerated to 6.4 percent in August.
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