PRODUCER PRICES CONTINUE TO RISE, INDICATING COST PRESSURES AT
INDUSTRIAL PRODUCTION LEVEL, SAYS SEIFSA
JOHANNESBURG, 27 MAY 2021 – The rise in producer price inflation (PPI) is
indicative of the cost pressures manufacturers are currently facing as a result of rising
input costs, the Steel and Engineering Industries Federation of Southern Africa
(SEIFSA) said today.
According to Statistics South Africa (StatsSA) data released today, PPI rose from a
low level of 3.5% in January, reaching 6.7% in April for final manufactured goods.
SEIFSA Chief Economist Chifipa Mhango said contributing factors to this increase
include rising transport and energy costs as well as mining products which, from an
industrial perspective, might not be financially sustainable in the long term.
“The PPI data shows that manufacturers are passing these costs on to consumers,
which is also why we see a rise in consumer price inflation, which rose to 4.4% in
April,” he said.
Prices for intermediate manufactured goods also increased from a low base of 8.6%
in January, reaching 11.4% in April. Mr Mhango said although this is positive news for
producers of intermediate goods in the Metals and Engineering (M&E) sector in terms
of potential revenue generation, in a depressed market this might negatively impact
key consumer market affordability, resulting in lower sales volumes.
Mr Mhango said SEIFSA is, however, encouraged by the declining PPI for the mining
sector. According to StatsSA, PPI in that sector fell from a high level of 22.9% in
January 2021, reaching 10.8% in April. In 2020 alone, mining PPI averaged 32.5%,
which was the highest since 2017, putting pressure on the financial position of M&E
producing companies.
Mr Mhango noted that the uptick in PPI will continue. “As the global economy slowly
starts to pick up amid more relaxed COVID-19 lockdown restrictions, with confidence
building due to the roll-out of vaccines across the world, global PPI will pick up, along
with oil prices and mining producer prices,” he concluded.
Issued by:
Mpho Lukoto
Communications Manager
Tel: (011) 298 9411 / 082 602 1725
Email: mpho@seifsa.co.za
Web: www.seifsa.co.za