Producer inflation cools to 0.5% in March, yet food costs signal price pressures
The PPI index dropped from 1% in February to 0.5% in March.
The rate of growth in South Africa's Producer Price Index (PPI) declined on a yearly basis, dropping from 1% in February to 0.5% last month – which bodes well for inflation as this measure is seen as a forerunner of consumer price hikes.
However, the latest print from Statistics South Africa showed that food price pressures are in the pipeline.
Food prices have been a sticking point for inflation for some time, with the Pietermaritzburg Economic Justice and Dignity's March Household Affordability Index having shown that core staple foods such as maize meal, rice, cake flour, white sugar, sugar beans, samp and cooking oil all increased that month.
PPI, which measures changes in the prices of goods and services sold by domestic producers to businesses, follows the Wednesday publication of the March consumer price index, which showed a decline on an annual basis from the 3.2% recorded in February to 2.7%
Higher prices of food, beverages, and tobacco adversely affected the PPI figure, Statistics South Africa said on Thursday. The annual percentage change in the PPI for agriculture, forestry and fishing was 2.4% in March 2025, down from 7.6% in February.
The main contributor to this rate was agriculture, a sector in which prices gained 2.4%.
Wednesday's consumer inflation figure, which was lower than expected, showed no consumer price pressures, Old Mutual chief economist Johann Els said at the time. He explained that food, clothing, shoes, fur, appliances and vehicle inflation were all well contained.
Lara Hodes, Investec economist, said on Wednesday that there was no impact on inflation in terms of fuel prices, given that the cost of a litre of petrol only dropped 7c in March. She added that 'a more substantial petrol price decrease was implemented in April, which will contribute to reducing inflationary pressure during that month'.
For March, Statistics South Africa noted that electricity and water also recorded yearly gains in the PPI figure, with these utilities up 10%. This is a decline from the 10.2% recorded in February. Electricity accounts for 10.8% of this increase, it said.
Several other areas of the PPI measurement showed increases, including mining, which was driven by gold and other metal ores.
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