Producer Price Inflation (PPI) has fallen sharply for a second straight month in July, reflecting lower fuel prices. Statistics South Africa’s (Stats SA) Producer Price Index dropped to 5.7% year-on-year from 7.5% in June.
The biggest driver of reduced costs at the factory gate was lower diesel and petrol prices following easing tensions, at the time, in the United States-Iran war.
PPI is considered an indication of where consumer inflation may head in the next six months.
“We must all give credit to oil prices, as we have seen that the contribution, when it comes to Diesel in June, I mean, it increased by almost 53%. Now it only increased, you know, by almost just around 29%. The same applies to petrol as well. In June, we’re talking 36%. Now, we are talking only 20%. And even if you look into the transport cost, that is the equipment thereof, also down by 1.4%. All because of oil prices that have been going down,” says Chief Investment Officer at Makwe Fund Managers Makwe Masilela.
—SABC—
