South African ecnomists say that the April PPI data released by Statistics South Africa (Stats SA), which shows that South African producer prices for all commodities rose 3.3% in the 12 months to end April from 5.1% for the 12 months to end March, provides yet more support for a rate cut in June.
According to Stats SA, on the month, producer prices were down 0.1% in April on an actual unadjusted basis, from unchanged m/m in March.
The April producer inflation rate was expected to be a median increase of 3.6% y/y, according to an I-Net Bridge survey of private sector economists.
The range of forecasts was from 2.7% y/y to 4.0% y/y.
Dawie Roodt, economist at PLJ Financial Services said: "Wonderful. Depending on Friday's CPI numbers, there is a good change that we will see a 2% repo rate cut in June. PPI is much better than expected and after yesterday's GDP numbers, the economy can deal with at least a 1% rate cut."
Michael Keenan, market analyst at MMS International said: "The PPI number provides yet more support for a rate cut in June. Rand strength continues to play a role in calming inflationary pressures. The PPI number supports our call for an urgent interest rate easing. The PPI data will support bonds but could cause the rand to weaken."
Annabel Bishop, economist at Investec said: "PPI inflation fell sharply, supportive of further easing in CPIX inflation and of a June interest rate cut (1%). Part of the reason for the disparity between the rates at which CPIX inflation and PPI inflation are declining is due to the overstatement of CPI (and hence CPIX inflation) as a consequence of the inaccurate data used for the rental component."
I-Net Bridge
Publisher: Business Day
Source: Business Day
South African ecnomists say that the April PPI data released by Statistics South Africa (Stats SA), which shows that South African producer prices for all commodities rose 3.3% in the 12 months to end April from 5.1% for the 12 months to end March...
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