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< South Africa's GDP
Economics Main Page >

South Africa's national statistics office announces that South Africa's annual producer inflation rate hits 18%

Category: Economics,  Inflation, Cost of living
Date: 25 August 2022
South Africa's, annual producer inflation reached 18% in July 2022, pushing the inflation rate of final manufactured goods up from 16.2% the month before. Is this a precursor of where consumer inflation is heading in coming months, which already hit a 13 year high earlier this month.
Chemical products one of the main drivers of producer inflation
Chemical products one of the main drivers of producer inflation

Annual producer price inflation (final manufacturing) was 18,0% in July 2022, up from 16,2% in June 2022. The producer price index increased by 2,2% month-on-month in July 2022. The main contributors to the headline PPI annual inflation rate were coke, petroleum, chemical, rubber and plastic products; food products, beverages and tobacco products; metals, machinery, equipment and computing equipment; and paper and printed products 
  • Coke, petroleum, chemical, rubber and plastic products increased by 42,8% year-on-year and contributed 10,5 percentage points.
  •  Food products, beverages and tobacco products increased by 11,4% year-on-year and contributed 3,0 percentage points.
  • Metals, machinery, equipment and computing equipment increased by 11,3% year-on-year and contributed 1,7 percentage points.
  • Paper and printed products increased by 11,1% year-on-year and contributed 1,0 percentage point.

The main contributor to the headline PPI monthly increase was coke, petroleum, chemical, rubber and plastic products, which increased by 6,0% month-on-month and contributed 1,7 percentage points​
Inflation kept unchecked is one of, if not the biggest economic evil out there. Why? Well it erodes the buying power of money. The R100 you have now, is worth 7.8% less than it was a year ago. So essentially a R100 from a year ago, is now only worth R92.20. So if you want to buy the same goods you bought with a R100 last year this time you will need more than R100 as your R100 is now essentially only able to buy you goods that would have cost R92.20 last year.

Worry right now for South African consumers is how much of these producer price increases will be passed on to consumers and how much of these increases would be absorbed by the producers why way of thinner profit margins?
​
With South Africa's inflation at a 13 year high we can be rest assured the South African Reserve Bank has a very steep interest rate hike its planning to make very soon. Buckle up folks. Surviving each money will just get harder and harder.

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